Thursday, November 13, 2008

The question no one's asking.

Articles about the auto industry pretty much have the lion's share of the financial new writing industry's attention at the moment, but so far I have refrained from posting much about the companies themselves. This post isn't going to be about any particular company, either. I just wanted to ask this question that nobody else seems to be asking:

Hasn't anyone besides me noticed that the automobile market has been beyond saturation for some time now?

The fact is, everybody who can afford a new car has one - or, actually, more people than can actually afford new cars have them due to "zero-down, low interest" loan offers and "cash back" promotions. These gimmicks have clearly gone as far as they're going to go. We are manufacturing more cars than we can sell.

This is a separate issue from the fact that the KIND of automobiles they are manufacturing are unsustainable and irresponsible. The next most relevant fact is that most people cannot go out and buy even an electric car right now even if they wanted to - and that isn't going to change anytime soon. Market saturation also doesn't take into account that in the future, circumstances are going to force us, by way of climate change, peak oil, or economic crisis, to switch over to using mostly public mass transit and only using private automobiles as an option of last resort or under unusual circumstances.

Another issue: The reason that the EV-1 was tanked in the first place was because since it had no moving parts, the company realized that they could not continue milking car owners who bought it for maintenance and repairs after the sale. And frankly, those after-the-sale profits are the only thing making automobile prices low enough for as many people to afford new cars as do buy them. These things are able to mask the market saturation situation. Without them, the saturation issue has a lot more light thrown on it.

The entire automobile industry, then, is going to have to shrink considerably - pretending otherwise is unrealistic in the extreme. The companies who try and cling to the status quo (combustion engine paradigm) now are frankly the ones who should be allowed to die. Like the buggie makers and horse-shoe manufacturers before them, they have become obsolete. The fact that it is a large industry makes it no less obsolete. Putting more money into an obsolete industry is like throwing it down the drain, class. We have far more important things we need to spend money on than the auto industry.

Those companies that should receive support are those who are completely tossing their old lines of cars and embracing the new reality. The reality is that we don't need cars rolling off the assembly line 24/7. We don't need giant auto companies anymore. And the fact is that the cars we do make are going to have to be independent of Foreign Oil and domestic Ethanol, which puts our already badly eroded farmland productivity into cars instead of onto people's dinner table. This is a stupid, stupid plan, to say the least. Domestic food production is going to have to increase a hundred fold to replace imports lost when the globalization scam fails.

Another reality is that the cars we do make will have to be small, energy efficient, and affordable for people making sub-living wages. Ford did have one thing going for him - he knew that raising average wages made people able to buy his products. For the last 20 years CEOs have been doing everything they can to lower people's wages - apparently not realizing people who can barely afford household necessities don't have money for discretionary shopping of any kind, much less gas-guzzling behemoths.

The long range problem is this: Our domestic oil production is enough to power ambulances, fire trucks, police and other government needs for quite a while, but it's not enough to power private automobiles. In order to save the oil for necessary emergency and civil services, we can't waste it on private automobiles. And in order to be independent of not just the price of oil, but oil sponsored terrorism and fascist Islamic regimes, we have to eliminate our dependence on foreign oil, plain and simple. We can't sacrifice American ideals freedoms because we're too selfish and stupid to built European-style mass transit. If we continue to focus our culture on private automobiles, that's exactly what will happen. In order to do this, we will have to implement a European style comprehensive system of mass transit - with very little reliance on private automobiles.

So the giant auto industry cannot and will not survive the way it is today. And I see little evidence that the "big 3" and their main competitors have a clue that their day is over.

As usual, however, some little guys are stepping in to fill the void that the giant slugs won't move fast enough to fill. The future of the auto industry is in little companies like ZAP. These new little cutting edge companies know, or should know, that they'll never be giant firms like GM - and they're ok with that. Local and Regional manufacturing businesses are the future of a sustainable economic recovery. It is these which should receive our patronage and support, not the dying dregs of the failed paradigm. It will be a painful economic shift, but it must be done - it will be done. And the automakers that be can either downsize, regionalize, and get on board the new reality, or they will eventually die, regardless of how much of our hard-earned tax dollars they take to their graves with them.

I vote we don't let them take any, class. Let your congress-persons know if you agree.

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