Car Guy
Government Could Save Detroit
It’s just a matter of lifting a lot of regulatory deadweight.
The Great Clunker Con proved one thing, at least: New cars are too expensive for a growing number of consumers. But chop $4,500 or so off the price and all of a sudden buyers are a lot more interested.
The problem is the interest (and sales) could only last as long as the payola continued to flow. Taking money from Taxpayer A to help Taxpayer B get behind the wheel of a brand-new car is ultimately just another government transfer payment scheme.
Now that the handouts are finished with, sales will almost certainly recede to where they were.
Still, there’s a better option to consider: Why not just do the obvious and make the cars cheaper permanently — but without any government financial flim-flam?
It could be done, easily. And it might just save the car industry. Perhaps even the economy itself.
For openers, the federal government needs to get out of the car designing business. Lawyer politicians like Barack Obama and D.C. bureaucrats do not comprehend even Lemonade Stand real-world economics. If it were up to them, instead of five cents per paper cupful you’d have $4 filtered water in a glass, scrupulously maintained at a carefully monitored 38 degrees Fahrenheit and sold only by appropriately trained and attired food service workers making an approved wage — with approved benefits.
The lemonade might taste great — but it would be unaffordable.
And so it is with today’s new cars. No question, they are sturdier and more crashworthy than their counterparts of the past — to a great extent because of government mandates governing everything from how strong bumpers have to be to the number of air bags your next new car must be fitted with.
As a result of all this, new cars are also much heavier, more complicated — and expensive — than the cars of the past.
But which is better: A car that performs well in a 30 mph offset barrier crash but is also beyond your means? Or a car that’s maybe not quite so sturdy but which you can still afford to buy?
Like it or not, that’s the bottom line choice here. Just as we can’t all drive V-8 Cadillacs, neither can average people afford to buy the ever-increasing roster of safety equipment that Washington regulators think they need — and should be forced to purchase, in an ever-increasing spiral of add-on expense.
This creates all manner of absurd distortions. For example, the car companies have had to go to ridiculous lengths — using completely unnecessary technology — to (barely) achieve the same fuel economy in a modern gas-electric hybrid car that was possible in a simpler, non-hybrid car 20 or 30 years ago … at two or three times the price.
For instance: A 2010 Toyota Prius hybrid gets about the same real-world mileage as a late 1970s VW Rabbit diesel or '80s-era Plymouth Champ. But the Prius costs several times what those cars cost because it is vastly more complicated. Get rid of the weight and expense-padding “safety” mandates and the car companies could stamp out legions of simple, lightweight 50 mpg (or better) economy compacts that could be sold for less than $10,000 brand new.
After all, 40 mpg cars were common 25 years ago — before the government’s rules added several hundred pounds of deadweight to each new vehicle. Nix the rules that add the weight — and with the benefit of modern engine technology, such as direct injection and Continuously Variable (CVT) transmissions — it should be easy to build a 60 mpg economy compact without having to resort to elaborate hybrid vehicle technology.
With diesel power, 70-80 mpg ought to be possible.
About the Author
Eric Peters is an automotive columnist and author of Automotive Atrocities: The Cars You Love to Hate (Motor Books International) and a new book, Road Hogs.
Letter to the Editor View all comments (30) | Leave a comment
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Tim| 9.3.09 @ 9:10AM
I haven't bought a new car since 1994. They do cost way too much and depreciate faster than you can make the payments.
Should buyers be able to freely choose "less safe" cars? This freedom to choose would immediatley be denounced by the Left as "imposing the cost of their injuries on us via healthcare costs". Motorcycle riders are already familiar with this argument.
Another example of why Nationalized Healthcare will be a further excuse to regulate every corner of our existence.
Lawrence of Lutz| 9.3.09 @ 9:16AM
Teach drivers how to drive. Teach them that driving is a full time job and that their safety depends on them, not the car!
Jim Workman| 9.3.09 @ 9:22AM
My 2000 Ford Focus is a relatively simple car. It is roomy (carries 4 and all their luggage) and fairly economical (25 in stop n' go and 40 highway) and it has had zero problems during its first 209,000 miles of operation. Outside of maintenence (brakes, tires, 2 timing belt replacements and normal fluid changes) I did replace the struts and tierod ends a while back and I had to replace the driver's seat (some spring sprung : $70 used). The paint is still mirror finish and the interior is good and it'll go 100 mph if needed and when asked can zoom away from any stoplight. I paid $13,000 back in November 1999, so that's no too bad.
I think there are available simple affordable durable cars out there, but people want behemouth rolling king sized beds with an entertainment center instead of practicality.
I find enough satisfaction in my life to be content with my little Ford.
I believe the Focus is still available for about the same price new today, unfortunately Ford couldn't leave well enough alone and they are ugly now.
Eric Damon| 9.3.09 @ 10:20AM
Re: Jim Workman
I believe that even those who want the "rolling king sized beds" should be able to buy that, if they are willing to pay the price for it. If they want to drive somthing that gets about 15-20 mpg, then that's their right...and they have to buy the gas for it, not me.
But the point is that even the cars that SHOULD be affordable AREN'T...because of government intervention. Take me for example; I usually drive by myself, and on long trips my family takes our mid-sized Inifiniti SUV because it has plenty of room for us and is relatively good on gas. But if want a new car, I would have to get something with dual airbags in front and an airbag curtain all around...even though I am usually the only one in the car. And the addition of those airbag curais and the like drives up the price of the car, while killing the fuel efficiency because of the extra weigh the car has to carry. And why? Not because I want it, but because the G says I HAVE to have it! That's what's killing the auto industry; they are being forced to make cars fewer people want to buy because the G is telling them how to make the cars!
L. Ross| 9.3.09 @ 11:08AM
When I was a kid, we had a diesel Rabbit. Got 48mpg combined driving. Thing was so light weight I could lift the rear end myself and slide it into parking spaces as a high school senior. Car weighed about 2000 lbs. Now, I have a Saturn Sky, two seat tiny car. Weighs 3000 lbs. All I can think of when I drive it is how great it would handle if you cut 1/3 the weight out. And how much the mileage would improve as well.
Jim Workman| 9.3.09 @ 11:43AM
This article is correct about the effects of the Nanny State on the auto industry. However, most of the problems come from the fact that the consumer demands passive safety. Having the illusion that the car is responsible for safety separates the individual from personal responsibility. How many accidents are caused by the driver loosing control of a vehicle and the driver being allowed to continue driving? When we start treating poor driving the way we treat drunk driving then we will begin to lessen the need for all these safety mandates.
Jim Bob Cooter| 9.3.09 @ 1:17PM
"As a result of all this, new cars are also much heavier, more complicated -- and expensive -- than the cars of the past. "
You either have to be on drugs, stupid, lazy, or probably some combination of those three. Have you heard of Google? Look at this:
http://www.nhtsa.dot.gov/cars/.....rFleet.htm
This gives the curb weight and CAFE (fuel economy) of cars from the 70s to the present! Wow! It's like there are these people out there who just do this stuff for us. I wonder how they get paid? Anyway.
Guess what that table says? Cars weigh the same as they did in the 70s and get almost double the gas mileage. Oops. Car weight did dip in the 80s, but guess what? CAFE in MPG is actually higher now than it was then.
So your big problem here is that cars are safer than they used to be while still weighing the same and getting better gas mileage...but they cost more? You sure suck as an economist. "They added more features and the price went up, so it must be the government's fault!" Get a grip.
You ever wonder why half the car ads on TV talk about their safety rating? Because it's a SELLING POINT. If you want to drive around in a death trap that gets the same gas mileage but costs $5k less, be my guest. They're called motorcycles. I LIKE airbags, ABS and well-tested structural design, because I enjoy being alive.
BTW, "40 mpg cars were common 25 years ago" is an outright lie, along with the rest of this pile of garbage you call an article. 1984 MPG: 26.9; 2004 MPG: 29.1. Boy, those common 40 mpg cars sure didn't bring that average MPG down very much, huh?
ben| 9.3.09 @ 5:37PM
40+ mpg cars in 1984:
Buick - Skylark, Skyhawk, Regal, Century
Cadillac - Cimmaron
Chevrolet - Chevette, Cavalier, Celebrity, Citation, 4cyl Camaro, S-10 pickup
Oldsmobile - Cutlass Ciera, Firenza, Cutlass Supreme, Omega
Pontiac - 1000, 2000 Sunbird, Fiero, 6000 Wagon, 4cyl Firebird
Plymouth - Colt, Colt Vista, Horizon, Reliant, Turismo
Dodge - Colt, Omni, Aries, Daytona, Charger, Rampage pickup
Ford - Escort, EXP, Laser, Tempo
Lincoln Mercury - Lynx, Topaz
Honda - Civic, Accord, Prelude
Nissan - Pulsar, Sentra, 200SX, Stanza, 2wd pickups
Toyota - Starlett, Corolla, Tercel, Camry, 2wd pickups
Mitsubishi - Precis, Tredia, Cordia
Mazda - GLC, 626, B2000/2200
VW - Rabbit, Quantum, Jetta (diesel) = 50mpg
40+ mpg cars 2009:
Smart - fortwo
Honda - Civic Hybrid, Insight
Toyota - Prius
VW - Jetta Sedan & Sportswagon
jerryofva| 9.3.09 @ 5:57PM
This is the worst article I have seen yet from Eric Peters. Where does he get the idea that people cannot afford a $20K car? He cites as evidence the mad dash for government gold as evidence that people are longing for a $4000 nano or such. Earth to Peters: virtually all the people who jumpted at the C4C deal were already in the market for a car. Uncle Sam just presented him with a winning lottery ticket in the form of 1996 V-8 powered Ford Explorer to reduce the apparent price.
There are many affordable cars on the market. In constant dollars today's $20K car is much cheaper to own and operate then its 1970 equivalent. Properly taken care of even a Chrysler product will last well over 100k miles.
Just because people don't have any home equity to use to buy that $40k BMW or Lexus anymore doesn't mean that can't afford a new car. You always have had the option of the Jetta over the 3 series and the Camry over the Lexus. Maybe that was what they should have bought all along.
levi's jeans | 9.3.09 @ 9:36PM
This article is correct about the effects of the Nanny State on the auto industry.
Dave Lincoln| 9.3.09 @ 10:23PM
Not a big math guy, are you, Jim Bob? You're taking an average mpg from a year when gas was under a buck and the economy was great (1984). Right now, gas may be the same price inflation-adjusted (probably is), but the economy sucks and 16% of Americans who want to work are out of a job. So, more people may want those high-mpg cars, eh?
Mr. Peters was not writing just about the average mpg in car sales; his point was that you can't find anything that can do what 30-35 yr-old car could in gas mileage if you want one. Indeed the car weight is everything. That's why the cars did get tinnier (if that is a word, I know it is in the car bidness) from the mid-1970's on. The manufacturers took off weight anywhere they could. Then, as Mr. Peters says. the US government put the weight back onto any car sold in America.
No, a motorcycle does not cost just $5,000 less than a new car, unless you mean a Harley. You can get a great bike for much less.
Ben is the numbers guy, Mr. Jim Bob. Thanks, Ben. Also, to Mr. Peters, again make very good points. Keep up the good work.
Oh, Jerry of Virginia, the reason $20K is too much for many people is something that you stated yourself at the end of your comment. People's house/ATM machines are spitting out any more cash - it doesn't matter whether it's for a $40K Lexus or a $20K Focus, the money aint comin out of the machine. In fact, to keep this analogy going, the AT- machine still needs it's monthly $1800 maintenance payment, and now it can't even just be sold for the cash inside. tsk, frickin' tsk!
Dave Lincoln| 9.3.09 @ 10:25PM
Dang:
WAS: " ... are spitting out ..."
S/B : " ... aren't spitting out ..."
Richard Baker| 9.3.09 @ 11:19PM
Detroit is done for. With "chocolate" destruction and a political class which is more tribal than municipal, the city is a goner. Who in their right minds would come to Detroit or stay?
Brant lee | 9.4.09 @ 3:52AM
Support it ,government spend too much on the useless things.Hope this article could help.
Bailey Button Ugg Boots
jerryofva| 9.4.09 @ 6:14AM
Mr. Lincoln:
Do the math, someone who buys a $40k BMW with his home ATM machine pays $400 per month on the loan. That is about same monthly payment for a Jetta financed with a $20k bank loan. Presumably, if our hypothetical BMW owner still has a job he is making those payments today so he could pay for his Jetta.
If the median family income earner(s) still are employed, and need a new car they can buy the Focus. If you lost your job and your house you aren't in the market even with the clunker rebate. You can't even buy Peters' theorectical $4k Nano.
Oh, yeah if you are tapped out your home equity but are still making your payments for first and the $40k loan on your 2005 BMW 5 series you won't need a new car for another 5 years or more.
Dave Lincoln| 9.4.09 @ 10:19AM
Well, Jerry, don't try to sell me on a BMW. I don't particularly like em and I've never bought a new car for that matter.
Your math sucks pretty hard, unless the BMW buyer gets a 9 year loan, which I've never heard of or puts a whole lot down (which was my point, from the home "ATM". $400 /month makes $4,800 per year on a 0-interest loan, which ain't gonna happen. I don't see that adding up to a $40K car on your normal load (5 years), unless my government school teachers lied to me about addition also.
The payments on the focus will be a lot closer to your $400/month, Jerry. Then, for any new car, unless you buy it flat out, you'll have to shell out for the full insurance and your property tax could easily run $30-$40/month depending on whether you live in a pound-me-in-the-ass state or a somewhat freer state.
You may be in a different financial class as some other people, but there are many people who could buy a 12 thousand dollar car but not be able to afford a 20 thousand dollar car, much less your yuppie Kraut-box.
I would be many of the people who got in on the C4C deal did not necessarily NEED a new car. They got sucked in just like the CRA and Fedzilla-backed banking bidness sucked in future home-owners. In fact, many are probably the same people.
jerryofva| 9.4.09 @ 3:28PM
Mr. Lincoln:
The typical payment for a home equity loan is 1% of the balance. $40k = $400 per month. How do you think a lot of expensive cars were sold during the last decade? Depending on trade-in or down payment a typical car in the low $20s can be had at that monthly payment on a five year loan How do I know this? And yes, I am in a high income earner but I didn't use my home equity loan for cars. I pay for them out of income.
Dave Lincoln| 9.4.09 @ 10:14PM
Jerry, obviously your HEL is for a period of 9 years or so (for zero down). I was thinking more of auto-loans for 5 years, where people would use the HEL for just general expenses. I see what you are saying.
I maintain that 20K vs 12K for a car (just as an example) can be the difference between "within our means" and "totally unaffordable" for many people. The difference in the weight and cost from the old cars was Mr. Peters point, and it's a good one.
FYI, I have only had a car load before for a year or so on a used car. Otherwise, cash is king. People are going to come around on this, as we have not seen the coming depression get going yet. Give it 1-2 years.
Oh, no charge for the financial advice; totally on the house.
;-)