What The New York Times Op-Ed Page Doesn't Know About Cars

Illustration for article titled What The New York Times Op-Ed Page Doesn't Know About Cars

Earlier this week, an automotive blogger took to the pages of the New York Times to argue that the Detroit bailout didn't work. Why can't the New York Times op-ed page find writers who know anything about the auto industry?


In his piece "A Green Detroit? No, A Guzzling One," Edward Niedermeyer does his best Tom Friedman impersonation, contending that despite what President Barack Obama said would happen, General Motors and Chrysler have failed to make strides in fuel-efficient technology, and "Detroit is falling back into the bad habits" which could lead to another bailout.

What Mr. Obama called his "one goal" - having Detroit "lead the world in building the next generation of clean cars" - is nowhere near being achieved. While the idea of improving G.M.'s and Chrysler's fuel efficiency was doubtless a politically popular justification for the bailout, American consumers have not embraced the goal with equal fervor.

Already we're in the ditch. It may be news to the anti-SUV crowd, but Detroit can rightfully claim a share of leadership in green cars. GM has the Volt, plus a 40-mpg compact car that doesn't suck and more on the way. Ford has hybrids and electric vehicles, plus it has spread fuel-efficient turbo engines throughout its lineup, including the full-size pickups Americans continue to demand. Chrysler's is behind the other two in general, but given it was dead in the water, its new models have acceptable efficiency for their size, and its reworking hasn't hit the smaller vehicles yet.

If Detroit isn't leading, who is? Niedermeyer pings Detroit for not matching the fuel economy of foreign automakers who don't sell millions of full-size pickups. Yet Toyota's average fleet fuel economy likely fell by 0.9 mpg for the 2010 model year, while Detroit's improved or stayed steady. Nissan has the Leaf, which just went on sale in limited numbers, and little else. Hyundai has come on strong, but doesn't play in the larger vehicles that Detroit builds, and European companies still pay federal fuel-economy fines rather than meet U.S. standards.

Meanwhile, Niedermeyer also wants to blame Detroit for building the pickups and SUVs that remain popular with buyers, saying inventories have swollen along with rebates. Even GM being profitable enough to launch the largest stock offering in history gets turned into a demerit because "taxpayers have every incentive to cheer on the bailed-out automaker as it overproduces vehicles and pushes cheap credit."

Automakers are just as vulnerable to credit crunches and other economic shocks as they are to sharp increases in energy prices. On this front, Detroit is falling back into the bad habits that led G.M. and Chrysler to collapse.


He's right in so far as inventories have grown — yet they're still lower than what they were a year ago. Given forecasts for a 10% growth in auto sales next year and strong sales in the back half of this year, it would be news if supplies weren't rising. Chrysler, often dinged for relying on fleet sales, had a 79-day supply at the end of November. Honda, the green, scrappy, fleet-resistant company held up by the Friedmanites as an example of what Detroit should be like, had a 70-day supply.

As for credit, GM and Chrysler now sport some of the strongest balance sheets in the industry, thanks to their bankruptcies. It's easy to find analysts worrying that GM won't carry enough debt. Chrysler's paying interest through the nose on its $7 billion U.S. government loan, but has $8 billion in cash on hand. And do we need to mention that it was far more than just Chrysler and GM that turned to governments here and abroad for help during the last credit crunch?


So according to the Times, if gas prices don't rise and Americans don't buy greener vehicles, then the bailout of GM and Chrysler fell short. If gas prices do rise — creating the demand for the more-efficient models Detroit has now shown it can produce — that's also bad, because the credit markets will suffer, and then flying unicorns attack Detroit and its Bailout II: Electric Boogaloo.


For this holiday, I'd wish for a few days where we set aside the kvetching about what the U.S. auto industry is or isn't, and simply enjoy the fact that we as a nation decided a couple hundred thousand people should earn a living in manufacturing instead of hearing their children ask Santa Claus to stop their electricity from being shut off. I would also wish for better insights into the auto industry from the New York Times op-ed page, but I know better than to ask for flying unicorns. (Photo: AP)


Jonathan Harper

Don't all of the big 3 rely fairly heavily on fleet sales?