Talk About Dense!
General Motors recently had its credit rating lowered drastically. The company has also whined about not being able to cover such employee benefits as retirement and health insurance because its business is hurting so much. It just can't sell enough vehicles. The once proud world leader in automobile production is, according to most accounts, in deep trouble. I am just old enough to remember a government official proclaiming, "What's good for General Motors is good for America," so GM's current state of affairs is indeed one for concern.
All of that is why I was really surprised by this article in the NY Times.
LIUZHOU, China - In this obscure corner of southern China, General Motors seems to have hit on a hot new formula: $5,000 minivans that get 43 miles to the gallon in city driving. That combination of advantages has captivated Chinese buyers, propelling G.M. into the leading spot in this nascent car market.
The minivans, which G.M. builds in a joint venture with a Chinese partner, have a quarter the horsepower of American minivans, weak acceleration and a top speed of 81 miles an hour. The seats are only a third the thickness of seats in Western models but look plush compared with some Chinese cars.
For years, G.M. has linked its fortunes in the United States to the sale of big vehicles, like Chevrolet Suburbans, only to find oil prices soaring and many Americans nervous about paying more than $50 for a tank of gas.
The Chinese government has also encouraged a shift toward more efficient models through stringent fuel-economy regulations, even as Congress has opted for more subsidies for oil production and a limit on hybrid car subsidies. [Emphasis added]
At this point, with oil closing at $64 a barrel in yesterday's trading, and gasoline costing anywhere from $2.50 to $2.80 per gallon, depending on location across the nation, why would GM (or any US auto maker) think people would still be interested in buying the behemoth? Many Americans are at the point that they would give up the horsepower and plush seats for a vehicle that got 43mpg. While US labor costs might preclude a $5,000 vehicle, a $12,000 vehicle with that kind of mileage might sell like hotcakes, especially if it were minivan sized so that a family of four could travel together. Of course, GM (and, apparently, the US government) hasn't considered that possibility.
The cost of gasoline is never going to go back down to the levels of the nineties, and the US does need to finally accept that fact. Plentiful and easily accessible oil no longer exists. We need alternative energy sources, and the recently passed Energy Bill completely ignores this. However, in the short run, an inexpensive and fuel efficient vehicle might be a great temporary solution.
Unfortunately for GM and for us, that doesn't look to be in the cards.
All of that is why I was really surprised by this article in the NY Times.
LIUZHOU, China - In this obscure corner of southern China, General Motors seems to have hit on a hot new formula: $5,000 minivans that get 43 miles to the gallon in city driving. That combination of advantages has captivated Chinese buyers, propelling G.M. into the leading spot in this nascent car market.
The minivans, which G.M. builds in a joint venture with a Chinese partner, have a quarter the horsepower of American minivans, weak acceleration and a top speed of 81 miles an hour. The seats are only a third the thickness of seats in Western models but look plush compared with some Chinese cars.
For years, G.M. has linked its fortunes in the United States to the sale of big vehicles, like Chevrolet Suburbans, only to find oil prices soaring and many Americans nervous about paying more than $50 for a tank of gas.
The Chinese government has also encouraged a shift toward more efficient models through stringent fuel-economy regulations, even as Congress has opted for more subsidies for oil production and a limit on hybrid car subsidies. [Emphasis added]
At this point, with oil closing at $64 a barrel in yesterday's trading, and gasoline costing anywhere from $2.50 to $2.80 per gallon, depending on location across the nation, why would GM (or any US auto maker) think people would still be interested in buying the behemoth? Many Americans are at the point that they would give up the horsepower and plush seats for a vehicle that got 43mpg. While US labor costs might preclude a $5,000 vehicle, a $12,000 vehicle with that kind of mileage might sell like hotcakes, especially if it were minivan sized so that a family of four could travel together. Of course, GM (and, apparently, the US government) hasn't considered that possibility.
The cost of gasoline is never going to go back down to the levels of the nineties, and the US does need to finally accept that fact. Plentiful and easily accessible oil no longer exists. We need alternative energy sources, and the recently passed Energy Bill completely ignores this. However, in the short run, an inexpensive and fuel efficient vehicle might be a great temporary solution.
Unfortunately for GM and for us, that doesn't look to be in the cards.
posted by Diane at 4:52 AM
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