There is good news and there is bad news. The bad news is that unless Corona Fever passes soon — not the virus, but the hysteria that’s been ginned up about the virus — the car industry will shortly topple like an unevenly stacked Jenga Tower with one too many logs already on top.
Several major players were in dicey shape before the Fever struck. Ford was among the notables. Its profits are down an almost not-believable 99 percent compared to 2018 — but not because of corona.
Rather, it was because of a belly-flopped launch — of the new Explorer, which was supposed to have been on the road before Corona Fever — in tandem with what is arguably a catastrophic decision by Ford to “invest” in electric cars like the “Mustang” Mach E, which is actually a crossover SUV that has as much in common with a Mustang as breakfast has with dinner.
But it’s not just Ford that is in trouble — and for similar reasons.
GM has been trying to jump-start Cadillac, but the motor won’t fire. Because it is a motor. Not an engine. Electrified Cadillacs like the ELR never achieved the sales success of the Pontiac Aztek — which is considered by many to have been among the greatest belly flops in the history of the car business. But GM sold tens of thousands of Azteks.
It never sold 1,000 ELRs.
It had to stop trying to sell the Volt. It has had to give away the Bolt (heavily discounted, massively subsidized). Despite the obvious hint that perhaps the market doesn’t want more electric vehicles, GM decided to make more electric models for which there are mandates.
But without subsidies — and with thirty-three million people out of work, as of this writing — this is a problematic equation.
Tesla sales were tanking before the Fever — in tandem with the withdrawal of the federal $7,500-per-car subsidy that enabled most of those sales. When you stop paying people to buy cars, they generally don’t.
GM’s Chevrolet division also flubbed a critical launch of a critical vehicle — the Silverado 1500, which was for decades America’s second-best-selling truck, after the Ford F-150.
It isn’t anymore.
Not because people aren’t buying trucks. Well, not because they weren’t buying them. Rather, they were buying other trucks — like the Ram 1500, which is now the second-best-selling truck in the country.
Because the restyled Chevy is widely regarded as hideously ugly, with a dumpster-looking puss combined with the marketing erratum of putting a turbocharged four-cylinder engine under its hood, something as out-of-place in a full-size truck as the Rockettes at the Vatican.
But Fiat Chrysler’s Ram has its own troubles — not because people weren’t buying Ram trucks, but because Ram (and Dodge and Chrysler and Jeep) were pre-corona bought up by French car combine Peugot — which also acquired floundering Fiat as part of the deal.
Now add corona. Even the healthy car companies — Toyota, for instance (which is healthy because it has not bought into electric car fever to the degree most of the rest have and also hasn’t flubbed its model launches) — are going to be in a world of hurt if sanity isn’t restored soon. No business can take being out of business for months on end.
Even the healthy car companies — Toyota, for instance — are going to be in a world of hurt if sanity isn’t restored soon.
Inventories of unsold cars are stacking up at ports; dealers are being forced to close their doors. Debt is accruing. Balance sheets are in freefall.
Another month of this and it will all be over. For what again?
The late astronomer Carl Sagan once said when asked about UFOs that extraordinary claims require extraordinary proof. The corona “experts” claimed millions would die. Then it was hundreds of thousands. Then tens of thousands. Not that any death shouldn’t be mourned, nor steps taken to avert avoidable deaths.
But hysteria — and innumeracy — have combined to render a large percentage of the population complicit in its own destruction.
Still, there is at least some upside to all this downside. For one — after Corona Fever dies down — we may see a return of a market-driven rather than mandate-driven car business, for the simple reason that people won’t be able to afford the mandates anymore.
It is possible we may see cars that don’t “transact” for $35,000 — the average price paid for a new car last year — because the reset after the Fever will make it economically unfeasible to mandate the things that have driven the cost of new cars through the roof, such as having to comply with impact standards that a 2000 model year Class Mercedes would fail today and gas mileage mandates that require every new car built to average at least 35 mpg — no matter how much it costs to achieve that.
And no matter how little gas costs us.
The record low cost of gas could also put paid to electric car fever. A “business” predicated on paying people to buy cars when gas costs less than $2 per gallon becomes Marx Brothers preposterous.
We may even see brand-new cars (and non-electric cars) that can be bought for less than $10,000 — you can already buy cars like these in many parts of the world — because not every country has mandates that effectively require every new car to have at least six and usually eight airbags as well as emissions control mandates divorced from any consideration of costs versus benefits.
Rent-seeking and cronyism may just fall victim to Corona Fever — and those would be deaths worth celebrating.