Lashing: SUV Buyers Were "Pawns in Detroit's Big Marketing Game"

[Ming]

'Big three' look at big losses
June 23rd, 2008
ROY MACMULLIN
www.telegraphjournal.com



We are seeing the long overdue death of the Hummer and the dying gasp of the SUV, those ultimate symbols of consumerism, disrespect for the environment and the resources of the earth.

The individuals who bought those gas-guzzlers have been pawns in a big marketing game. GM, Ford and Chrysler knew a good thing by positioning the large vehicles as status symbols with big price tags and profits over $10,000 per unit. They co-opted the American and Canadian government CAFE standards to allow large vehicles and SUVs a pass on fuel economy. The big three automakers are now fighting a wintertime retreat from Moscow. They are getting massacred by Honda and Toyota among others, who have had a better strategic vision over the years.

GM's results have varied from a high of $10 billion in 1984 to a loss of $38 billion in 2007. In the last 10 years, they've lost money overall. Recently, GM's VP Bob Lutz indicated that it would cost an average of $6,000 more per vehicle to meet the new CAFE standards. If that is the case, GM has a problem, as consumers will have less disposable income for cars in the future. Toyota indicates that it will meet the 35-mpg standards well before the required date of 2020.

The CAFE standards will soon be the least of the American automakers' problems. Higher gas prices will make the standard irrelevant, with consumers demanding vehicles giving 50 to 100 mpg, no matter what kind of silly marketing schemes Detroit comes up with.

What has been the "butterfly effect" of GM on the U.S. and world economy? Obviously, GM is no butterfly, but a recent film by the same name or the 1947 film "It's a wonderful life" with James Stewart illustrates the concept that a relatively small action can have a great effect in the future.



One can only wonder what would be the alternate future if GM had embraced fuel efficiency for both small and large vehicles (SUVs). Supposing that the world gas usage was 2 million or 5 million barrels a day less than it is today. This would have been a real possibility. Supply would be greater than demand and the price would still be at $55 per barrel or less. The world's oil bill would be $2,300 billion less in 2008. These are large sums by anyone's standards, as the Canadian federal budget is $550 billion per year. This is equivalent to the entire cost of the Iraq war until 2017. GM, in turn, would be profitable today.

I see the big three automakers headed towards bankruptcy in the next few years. GM is burning through cash at a rate that precludes significant changes to their products and cost structures that would be required. Are GM and the others too important to be allowed to fail? Will the public be interested in a bailout of this size?

Rick Wagoner, CEO of GM, seems to understand that the oil prices are not coming down, but does he really understand the implications of peak oil in his bones? Can someone who earns $15 million a year not fully understand the fuel supply that his products run on?



GM has some new products in development, one being the Volt, an electric car. The car will cost $40,000 and run 40 km before the backup engine kicks in. At that price, it is not initially intended as a high volume seller.

In previous columns, I've mentioned the lack of consumer choice in cars that have good mileage ratings and which are available elsewhere. A car dealer would say that they don't meet the North American, standards but that sounds like thinly veiled labour protectionism. The climate, emission and safety standards in Europe should be capable of harmonization to North America. The cars work perfectly well in Europe.

"There are 113 offshore models (mostly Europe) that get over 48 miles per imperial gallon in a combined rating," according to an article by MSNBC earlier this year.

Source: http://telegraphjournal.canadaeast.c...article/333861

[Sal Collaziano]

Plenty of people (including myself) who own large SUVs are very happy to hear this news. Many of us only have these vehicles for the ability to see around the other big vehicles on the road. Once there are a NORMAL amount of trucks on the road again (like in the 80s or 90s), I won't need a full-size SUV anymore.

[ColinOpseth]

Originally Posted by Sal Collaziano

Plenty of people (including myself) who own large SUVs are very happy to hear this news. Many of us only have these vehicles for the ability to see around the other big vehicles on the road. Once there are a NORMAL amount of trucks on the road again (like in the 80s or 90s), I won't need a full-size SUV anymore.

Sal, you could have purchased a Ranger and put a 4" lift on it and been taller than a standard SUV. Face the truth, you bought because you're a lemming. You didn't need to buy an Escalade; you're just pissed off that it costs $110 to fill your tank now which means you probably couldn't afford $110 a tank in the first place.

I drive a '07 NBS Sierra because I want to drive a truck. You factor gas into the equation. I didn't buy it because I was scared of other big trucks. Jeez Louise.

Your argument doesn't make sense. It's the same thing as saying, "I bought a 60" LCD because like everyone else that has a 26" I had trouble seeing the screen." Dee-dee-dee.

[hunchman]

Another article about the sky falling. It's funny how there is no mention about how the consumer wanted and demanded suv's and trucks. It's also funny how he doesn't mention how a car like the civic today gets the same or worse gas mileage than say it did almost 30 years ago.

Ming you gotta stop bringing up this garbage it's old already

[1487]

the ideas expressed by that idiot author represent the conventional wisdom amongst journalists. Consumers have no role in the SUV boom, its all about Detroit automakers. They tricked and coerced folks into buying SUVs while Toyota and HOnda focused on hybrids and compacts. The Tundra, 4Runner and Sequoia are all figments of my imagination. So is the Toyota ad I just saw yesterday in which they boast of offering 8 SUV models.

[I-Love-Pontiac]

Lmao! Holy hell! Talk about an anti American article.

I hate how they make it sound like GM somehow brainwashed people into buying suvs. If they could freakin do that, they would have also brainwash people into buying their Saturns and Pontiacs.

One can only wonder what would be the alternate future if GM had embraced fuel efficiency for both small and large vehicles (SUVs).

Uhhh. Hate to break it to you, but GM has the most fuel efficient SUVs in the world.

[Ming]

Originally Posted by hunchman

you gotta stop bringing up this garbage it's old already

It's just a sample of what's out there, and a pretty harsh one. No need to bury one's head in the sand and pretend the public's (or media) view of GM has changed to Volts and Roses.

Helps to know what people are thinking so GM can attack on all (4) cylinders. Flood the market with Aveo ads or something when it launches refreshed for 2009. Toyota had Yaris ads out the wazoo for a solid 6 months on many TV shows I watched like Smallville, Mad TV, etc. They even had characters driving Yarises and mentioning it by name. Stop thinking so much about the profit margin on Aveos before allocating them ad resources. Actually attempt to market and stock dealerships with smaller trucks like the Colorado. Change the image of GM/Chevy. Ditch the Cowboys leaning up against Tahoes and Silverados climbing mountains and hauling yachts advertisements for a while.

Convince people that GM really WANTS to sell smaller cars (while it puts big incentives on the hoods of 2008 model SUVs still on the lots...). Or the same thing I see at work will happen around the country. People will flock to Toyota and Honda like never before.

Originally Posted by I-Love-Pontiac

Lmao! Holy hell! Talk about an anti American article.

Actually, unless I'm mistaken, it's Canadian.

[TheWraith]

Originally Posted by ColinOpseth

Sal, you could have purchased a Ranger and put a 4" lift on it and been taller than a standard SUV. Face the truth, you bought because you're a lemming. You didn't need to buy an Escalade; you're just pissed off that it costs $110 to fill your tank now which means you probably couldn't afford $110 a tank in the first place.

I drive a '07 NBS Sierra because I want to drive a truck. You factor gas into the equation. I didn't buy it because I was scared of other big trucks. Jeez Louise.

Your argument doesn't make sense. It's the same thing as saying, "I bought a 60" LCD because like everyone else that has a 26" I had trouble seeing the screen." Dee-dee-dee.

i agree with colin, that's the most ludicrous defense for owning a huge SUV i've seen yet. i can see buying something with a higher seating position because of all the trucks and suvs on the road. my fiance even made that argument when we were car shopping this spring. but an ESCALADE is a little bit extreme to buy solely based on the seating position. Even if you're accustomed to buying luxury cars, there are plenty of more reasonably sized options available

[geozinger]

Originally Posted by 1487

the ideas expressed by that idiot author represent the conventional wisdom amongst journalists. Consumers have no role in the SUV boom, its all about Detroit automakers. They tricked and coerced folks into buying SUVs while Toyota and HOnda focused on hybrids and compacts. The Tundra, 4Runner and Sequoia are all figments of my imagination. So is the Toyota ad I just saw yesterday in which they boast of offering 8 SUV models.

1487, ya beat me to it. Consumers are just sheep, they buy whatever the big 3 tells them to. Oh, pay no attention those mammoth SUV's from Japan, Inc. Since they're foreign, they MUST be good, right?

So using the same logic, we should all be buying SUVs or at least only the small cars that the Big 3 offer, right? No one can think for themselves, right?

What a load.

I don't want a cheerleader domestic auto press, but what we have now is so anti-domestic you'd think they were sponsored by the old Soviet Union back in the cold-war days... I just want some objectivity.

/rant

[ogg vorbis]

i thought comparing gm to late WWII Nazis was funny...and the japonese are the allied forces?

suv owners had better trade them in asap...dealers won't want them if they can't sell them.

emissions controls have a negative effect on mpg. europe decided that slightly higher emissions are worth the better economy. their regular gas is higher octane than our premium gas - higher compression = better economy. they're also 50% diesel.

[megeebee]

Sweet Jesus Christ!


I know dozens of people that gladly went out and bought SUV's in the last decade or so, and not one of them reported being held at knife-point to sign the sales agreement!

I'm sure this is just another sign of the end of our Civilisation. Self- loathing and pessimism are much more effective at killing a Civilisation than bombs. As lovely as it would be to blame jounalists as a group, they are but a symptom. A reflection of the majority of opinion. An opinion that is reenforced time and time again with its retelling.

[member12]

I just don't get the environmental point of view.

It's not that I don't care (I do live on this planet), but I just can't get into the "SUVs are evil" campaign while ignoring the real facts.

It's just a religion that I am not a part of...and I support a reasonable separation of church and state.

[spyderman61]

Some things are better off left un-said, need I say more, Colinopseth that was a good comeback on your response

[eaton53]

Pawns... that is freakin' hilarious.

I've got one... got it not because I was scared of other cars or because of the neighbors. I got it because my wife doesn't drive much and it was cheap!

Resale... pfft. I'll drive the wheels off it then sell it for whatever I can get. I'll get my money's worth out of it. Then I'll probably buy another much nicer one.

[Ambalanche]

Originally Posted by megeebee

Sweet Jesus Christ!


I know dozens of people that gladly went out and bought SUV's in the last decade or so, and not one of them reported being held at knife-point to sign the sales agreement!

I'm sure this is just another sign of the end of our Civilisation. Self- loathing and pessimism are much more effective at killing a Civilisation than bombs. As lovely as it would be to blame jounalists as a group, they are but a symptom. A reflection of the majority of opinion. An opinion that is reenforced time and time again with its retelling.

AMEN!!