Automotive News - June 30, 2008 - (Page 12)

12 • JUNE 30, 2008 opinion For as long as most of us can remember, the U.S. automobile business has had cycles. Whenever there was a down cycle, you knew you had to hang in there, and before long, things would come back to normal. And then you would see the cycle head upward again. It’s not going to be that simple this time. We should get used to the fact that it’s never going to be the way it was a generation ago. I enjoy reminiscing about what it was like when gasoline was two bits a gallon and you could spend a couple of bucks and be able to cruise all weekend. It won’t be too long before we gather our grandchildren around us and tell those kinds of stories. But they are just stories. There have been fundamental changes during the past couple decades that are changing the business permanently. We will be affected continually by the DAILY AUTO NEWS >> You can get the news you need every day. Go to www.autonews.com/signup and sign up for our daily e-mail newsletter. The only thing permanent is change Beware of bad energy ideas in election years The election year run-up in gasoline prices and the concern over carbon dioxide emissions have focused attention on the need for a national energy policy. But the political silly season already is generating bad public policy ideas. One of the earliest was the idea of suspending the federal gasoline tax for the summer to lower the price of gasoline, which would have increased demand, consumption and CO2 production. That plan was supported by presidential candidates Hillary Clinton and John McCain. McCain’s latest idea — a $300 million prize for developing a futuristic battery — would be a waste of tax dollars. Individuals and companies already are trying to develop better battery technology. They need assistance now, during r&d, not after the battery technology is developed and achieves commercial success that dwarfs McCain’s prize. The national laboratories — if properly directed and focused — should provide some assistance. But government ought not play favorites. That’s why the General Motors suggestion of a tax credit for buyers of the Chevrolet Volt also would be bad policy. Rather, government should encourage reduced fuel consumption, however it happens. If it happens because of lighter or smaller vehicles, fine. But subsidizing a few thousand rich environmentalists who want to spend up to $45,000 for a car with showy technology is a lousy investment of the public’s money. Government should stand back from the panic and come up with a reasonable energy policy, which could include public transit and must include changes by other industries. That way, government can use reasonable incentives to reward behavior that is good for society. rising cost of petroleum. And it will affect a lot more than just the price of gasoline. It will change our lives and reduce our disposable income as the cost of everything goes up along with motor fuel. We won’t have scarcities. The United States can still outbid just about everyone else. But it will cost a lot more. And since we probably won’t want to give up on so many of our creature comforts, we’ll spend more money to keep what we have. Big cars with fuel-efficient engines will cost more. If more of us start driving small cars, we’ll want them outfitted like larger, more luxurious vehicles, similar to how the Japanese buy cars. And we’re going to be more fickle. Our tastes will change overnight as the next There have been fundamental changes during the past couple decades that are changing the business permanently. thing hits the marketplace. Whether it’s $5-a-gallon gasoline or a new electric car that reduces the cost of ownership, consumers will react, and we’ll see massive changes in buying habits. Predicting customer patterns will be difficult — or maybe impossible — because their habits won’t be a good gauge. It will be a great time to watch market shares shift because some companies that were falling could recover with new, innovative products. The public’s taste will be all over the map, which means it will be a challenging time with great opportunities. small cars. Today, the price of gas is $1.47 a liter, or about $6 a gallon, in Montreal. Now it’s the Quebec dealers’ turn to ask Chrysler: What does Chrysler want? I guess the answer is more small cars. Luckily for us, we have the Dodge Caliber and Jeep Compass and Patriot, which came out just in time to give Quebec dealers a year-to-date increase of 15 percent in retail sales. MARC LAVIGNE Directeur general Longue-Pointe Chrysler-Dodge-Jeep Montreal End vehicle title washing Some estimates say that as many as 500,000 cars and trucks will be damaged by this spring’s flooding across the Midwest. Thousands of those damaged vehicles will be dried out and sold to unsuspecting consumers and auto dealers because Congress has failed to pass legislation requiring insurance companies to make total-loss data available to the public. For shame. Most years, about 5 million vehicles are totaled because of crashes or other damage, and thousands are retitled and sold by unscrupulous operators. This year there will be more. Congress must pass and the president must sign legislation that requires insurance companies to disclose all total-loss vehicles and permanently brand the titles of those vehicles to put an end to title washing. Drastic price cut hurts bottom line To the Editor: Regarding the letter “Suppliers cut prices, and quality suffers” (June 16), I agree with the theme with one significant exception: The bottom line will suffer with a rapid drop in prices. Consumers who experience major quality problems wind up purchasing their next vehicle from a different manufacturer. Sales drop over time because of quality issues, and that does affect the bottom line. Also a rapid price cut of 25 percent just increases the risk of supplier financial failure, and the supply chain faces significant costs dealing with failed suppliers. RUDY KOEHLER President Innotech Precision Toronto THE WEEKLY NEWSPAPER OF THE INDUSTRY Established in 1925, published every Monday by Crain Communications Inc. Keith E. Crain, Publisher and Editor-in-Chief Peter Brown, Associate Publisher and Editorial Director David Sedgwick, Editor Edward Lapham, Executive Editor HOW TO REACH US Web site: www.autonews.com Editorial staff autonews@crain.com Phone: 313-446-0361 Fax: 313-446-0383 Circulation Advertising subs@crain.com rgreer@crain.com Phone: 888-446-1422 Phone: 313-446-6050 Fax: 313-446-6777 Fax: 313-446-8030 Editorial data/research To locate information that has been published in Automotive News, call 313-446-1662. Customer service To start or renew a subscription or to report an address change or a delivery problem, e-mail subs@crain.com or call 888-446-1422 (in the U.S. or Canada) or 313-446-1662 (in all other locations). AUTOMOTIVE NEWS (ISSN 0005-1551) is published weekly at 1155 Gratiot Ave., Detroit, MI 48207-2997. Periodicals postage is paid at Detroit, MI and at additional mailing offices. Postmaster: Send address changes to AUTOMOTIVE NEWS, Circulation Department, 1155 Gratiot Ave., Detroit, MI 48207-2912. Canadian Post International Publications Mail Product (Canadian Distribution) Sales Agreement #40012850, GST#136760444. Canadian return address: 2-7496 Bath Road, Mississauga, ON L4T 1L2 Printed in the U.S.A. Canada to Chrysler: Give us small cars To the Editor: I have been working for a ChryslerDodge-Jeep dealership for 21 years and as general manager for 12. When Chrysler introduced the Hemi engine at the annual convention in Las We invite letters from our readers. Please limit your letter to 250 words and tell us whether we may print it. We reserve the right to edit it. Include your name and title, the name of your company, your city and your state. Also include your telephone number or your e-mail address. E-mail letters to: autonews@crain.com Or send them to: Letters Automotive News 1155 Gratiot Ave. Detroit, MI 48207-2997 Vegas some time ago, I turned to another Quebec dealer and said: “We definitely don’t need Hemi engines in Quebec with a gallon of gas at $3.50. And what happens if the price of gas takes off like in the ’70s?” Also, I said, “Aren’t they thinking of the growing environmental movement?” Those simple thoughts were so obvious. I remember at every meeting, the top brass of Chrysler Canada would ask what Quebec dealers wanted because our market share was only 7 percent. We answered, over and over again, “We want small cars.” And they replied, “We can’t make them at a profit.” I remember how we alienated them with our demand for small cars. Chrysler had a golden opportunity to analyze consumer demand in North America, where gasoline was $3.50 a gallon; it would have discovered that 50 percent of the vehicles on the road were There’s nothing like a Hummer To the Editor: You guys have never hidden your complete disdain for the Hummer brand, and your arrogant, factchallenged editorial “GM should dump see LETTERS, Page 14 http://www.autonews.com/signup http://www.autonews.com

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Automotive News - June 30, 2008

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