Wednesday, June 24, 2009

How to Fix the Auto Industry

I'll give you a hint: don't ask GM to do the heavy lifting and build an electric car. Don't assume Fiat will simply become popular in America this time around. The second article has the answer:

“In Europe, the high cost of fuel pushes consumers to buy fuel-efficient vehicles,” Close said. “In the U.S., it’s the government trying to convince people this is the sort of technology they need. The big question is whether they will succeed.”

The government can force people to like small cars by making it prohibitively expensive to own big ones. Why do we waste our time with subsidies and fuel standards? Unreal.


Ravi said...

Completely agree. My parents bought a luxury brand SUV some years back when the economy was better and gas was cheaper. I've been trying to get them to sell it as it serves no purpose (as a "status symbol," it sends the wrong message in this economy and my parents have never used it as a SUV, ie. off-roading or carrying heavy loads of stuff).

The rising prices of gas the last 2 years (before the economy collapsed) were probably the best thing to happen to the auto industry (in terms of encouraging them to make better/more efficient vehicles).

Pete Abbate said...

Haha, that last caveat is very necessary, because the high prices definitely accelerated the fall of GM and Chrysler.

I'm looking forward to Fiat coming within the next 18 months, as has been rumored. If they offer a decent special for college graduates, I'll probably look to replace my 17-MPG Chevy Blazer. As much fun as it is to drive, I have not missed paying for gas during my time in Rome.

Compared with the totality of knowledge which is continually utilized in the evolution of a dynamic civilization, the difference between the knowledge that the wisest and that which the most ignorant individual can deliberately employ is comparatively insignificant. ~Fredrich Hayek in The Constitution of Liberty