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Big Three selling jets, but just inching toward efficiency
It looks like it's not just a buyer's market for automobiles, but for corporate jets.
After being soundly criticized for arriving in DC via private jets, hat-in-hand asking for $25B, CNN Money reports that Ford and GM now have plans to get rid of their corporate jets (all 5 in Ford's case, 4 of 7 in GM's case), with both CEO's driving to Washington in hybrid vehicles this time. No specifics were provided regarding Chrysler's jets or their CEO's travel plans.
Andrew Winston, author of Green to Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage, gave a keynote address recently at a statewide conference hosted by the Southwest Michigan Sustainable Business Forum. Winston made the compelling argument that the Big Three were in trouble long before the U.S. financial meltdown. In May '08, the overall car market was down 11% from the previous year, but Ford was down 16%, Chrysler was down 25%, and GM was down 28%. But...
"Toyota was also down after making some mistakes and trying to sell some big vehicles also, but only dropped 4%. Nissan was up 8% and Honda sales were up an astonishing 16%. Let's repeat that: Honda sold more cars this spring than the year before."
Winston argues in his blog that "the companies that sell smaller, more energy-efficient cars are doing ok."
So far, Ford seems to be the only one talking about efficiency, with pledges to boost fuel efficiency and calls for collaboration to develop high-tech batteries domestically. Detroit needs to convince the public that they recognize this sea change, and will be responsible with our tax dollars before they're likely to garner more support.
They also need to fix the financing on efficient cars. All the finance specials are for buying less efficient cars that they still produce. It is a marketing failure to focus on selling people the cars they don't need.
And their marketing needs to adjust to the new market. Business has been focusing on gains in profit, not by finding ways to build more and better, but instead on doing the same but paying lees. So now the market is full of people with less to spend.
And, get away from the marketing concept of "you can pay me more for this because look how much you are going to save in gas."
And very important, the market has shifted to people who have worse credit who must now pay higher financing rates that they can't afford to pay. So, they just keep their old SUV's like our household, one having 230,000 miles on it, the other with 150,000 miles, and no plans to buy
Using May 2008 data is cute but doesn't show us what is really happening. To quote a recent NYT article (http://www.nytimes.com/2008/12/03/business/03sales.html?bl&ex=1228453200...) :
At Toyota, which was offering loans with zero percent interest on 11 of its normally popular models, sales fell 33.9 percent. Honda’s sales dropped 31.6 percent and Nissan’s plunged 42.2 percent.
Nothing is working in today's market. If any of the traditional 3 American manufacturers can survive during the next 6 months, they could be poised for a quick recovery. With gas nearly as low as it's been in the last 5 years and consumers having been conditioned to gas at $3.50 - $4.50 / gallon, when the economy starts to recover and people are looking to replace their cars, they'll be more than anxious to buy a nice big ol' SUV. Kinda like someone going out and having a 22 ounce prime rib after a long, painful diet.
Toyota is not offering the promotional financing on its Yaris product line, their lower priced cars. And the promotional rates that are offered are only available to those who don't need to get the promotional rate in order to afford a car.
Pray to God and thank him for you being so well off that you don't understand this.
I agree with Allen and disagree with the writer and Harold.
When are we going to start blaming the consumer!? We are the ones that generally don't give a crap about the environment, only our pocketbook. All the car companies have efficient vehicles available, but consumers are too fixated on power and image to buy the green alternative. You can't blame a company for selling what people want to buy. The high gas price spike was artificially created and now that prices have gone lower again, you're seeing people reverting to buying inefficient vehicles.
If consumers really wanted green vehicles, they would have bought them all along. So, they would have bought stationwagons instead of SUV's and 4 cylinder mid-sized sedans instead of V6 mid-sized sedans. But, they didn't and then they did for a year or so, and now they won't again.
It's the government's job to incentivize buying more efficient vehicles rather than formulating what the manufacturers can make regardless of what the market wants. A gas tax would work, but it's regressive.
