Re: Why Did Detroit Need to Be Forced Into Fuel Efficiency?
I agree with mkaresh that fuel efficiency standards are a poor alternative to a carbon tax which is the simplest way to reduce demand and increase investments in alternatives and fuel efficiency. Fleet averages can be manipulated, but they are better than nothing, given the current lack of support for a tax on fossil-fuels. I see several reasons why Detroit is so reluctant to move away from big, heavy vehicles and a couple of them are:
First, they have a lot of corporate "know-how" in the drivetrains and other components used in rear-wheel drive trucks and cars, so they are good at building those types of vehicles. They also have a huge legacy pipeline of parts, suppliers and methods associated with those vehicles. Do not underestimate how important this is to logistics and manufacturing efficiencies. Conversely, they are not particularly good at building high-quality, small, front-drive cars - this is a holdover from the days when a compact was for those who could not afford a bigger car. They have a huge learning curve here and not much time, so they keep stalling, even though it just delays the inevitable.
Second, their C-level executives are all inbred (from the industry) and hence are blind to what we see as an obvious future of fuel scarcity, higher costs and climate change. They still get assurances from execs at oil companies and energy associations that supply will be able to keep up with demand, and their existing (aging) customers still like what they produce. As a result, their strategy lacks any comprehension of, or response to, the new market dynamics. I was dismayed when I saw both Ford and GM introduce completely redesigned SUV and truck lines in the past five years that were HEAVIER and MORE POWERFUL than their predecessors. And the ongoing investment to build retro cars (Mustangs, Chargers, etc) shows how desperate they are to build what they know how to build at all costs.
Third, it is well known that Detroit has the highest pension commitments and healthcare overhead of the auto manufacturers worldwide. Large cars and trucks historically were the most profitable and it is difficult for them to make the strategic shift necessary to vehicles that will undoubtedly be less profitable per unit than before, when faced with these legacy costs. It goes against all traditional thinking.
It would appear to me that unless the Detroit manufacturers make radical shifts in their strategy and technologies (for manufacturing, logistics and the vehicles themselves) they will continue to lose market share and eventually be relegated to niche players.
Last edited by jrb_nw; 07-27-2007 at 07:19 PM.
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