Last week General Motors reported its core North American auto operations had a loss of $1.2B in the second-quarter. This was in spite of their “Employee Discounts for Everyone” promotion that generated strong sales.
Ford also reported a loss of $907M in its North American auto operations. The Wall Street Journal reported, “GM and Ford are suffering in part because demand for sport-utility vehicles, some of their highest-margin vehicles, has slumped in recent months as gasoline prices have risen…”
What I ponder in this is why a 2005 Ford Expedition gets a measly 12 miles a gallon when Ford’s Model T got 24 MPG in 1908! Why hasn’t the automobile industry made advances in fuel economy similar to advances made in computer processing power? The PC’s most of us use today have far greater processing power and cost a fraction of the old room sized computers of the 1950’s and 60’s.
It seems GM’s only strategy to reverse their slide is to extract concessions from the United Auto Workers. Good luck with that.
In contrast to the plight of the Detroit Dinosaurs is Toyota. On July 1st, they reported their best first-half of sales ever in 48 years in the US. They are succeeding with fuel-efficiency and good value in their products. Toyota is pushing the efficiency boundaries further with their electric-hybrid engine technology. They started with a smallish Prius, but now offers hybrid versions of the Toyoya Highlander SUV and the 2006 Lexus RX 400h.
So what’s the answer? I’d like to see more tax incentives for individuals and businesses who want to invest in green energy sources, including hybrid vehicles. By some counts, we’ve spent over $182B on the war in Iraq. How much progress could have been made weaning ourselves off of oil if that money was invested in alternative energy like hybrids, hydrogen and solar? There once was a saying, “as General Motors goes, so goes the nation.” I’m not liking the direction of either.