Matthew Engel

Originally Written March 29, 2009

2010 Honda Insight

What an interesting 48 hours for the American auto industry. With the CEO of General Motors canned, a new onslaught of fast, fun, and fuel efficient cars should be arriving on the market. Since Rick Wagoner took hold of the GM as CEO in 2000, shares have declined ~20 fold.  Apparently, their business plan involving the Chevy Volt, was not speedy enough for the Obama adminstration. Strategically, I think this was a necessary move to begin pushing our country into greener technologies. However, I have never before heard of the federal government firing a private sector employee for their job performance.

But then again, I’ve never seen the government invest $6 billion in a private company either, so I suppose its within their equity rights as a shareholder to do as they please. Obviously, Rick Wagoner was not about to say ‘no’ to the President. 

2010 Honda Insight Hybrid Unveiled at Paris Autoshow

If I could, I would ask Rick “Why does Honda have a nice looking car which gets 40 mpg in the city, and you don’t (see new Honda Insight - some reviewers were able to get 70 mpg )? If it’s so hard to do, why are the Japanese already able to design and manufacture such cars and sell them with a base price of $19,500? How come no American car makers have any hybrid or electric cars on the market? I thought GM was supposed to be a leader in innovation and technology!”.

We have a right to be upset at American auto manufactures and they deserve to be punsihed for their lack of vision. (Click here to see more pictures of the Insight from the show).

However, it would be foolish to simply disband them all, lose our manufacturing capability and destroy an important sector of our economy. The trick is to simply help them refocus their research, development, manufacturing and investments to begin making cars which do more with less. We are all doing more work, more activities these days with less, why shouldn’t our cars? The other option would be to begin eliminating the personal transportation vehicle all together and begin massive restructuring of our public transportation systems, which may be the better option long term. 

Former GM CEO, Rick Wagoner

I’ve suspected there has been something up Obama’s sleeve after Monday’s firing. Many analysts were completely surprised by the timing. Why now, they asked? I would suppose the answer is so that we, as a nation, could move forward as quickly as possble with a new fleet of electric or hybrid fuel efficient vehicles. To further reduce our dependence on oil, one would need to remove the gas-guzzling SUV’s off the road, and this is exactly what will happen.

With the summer months approaching, gasoline demand and therefore prices will once again skyrocket, though probably not as high as last summer.  

Financially, Wagoner was a disaster for the company. This is due to his lack of insight and leadership involving the future of America and the automobile industry as we know it. Specifically, it was his inability to forsee the growth occuring worldwide leading to more oil demands and increases in price. A simple doubling of the cost of gasoline in the U.S.  would render his entire fleet of vehicles nearly worthless. An armada of massive steel tanks with no one was willing to drive them. How out-dated, how ancient, how inefficient, how dirty! Wagoner’s complete embrace of highly inefficient petroleum-based vehicles was his ultimate downfall- and as these vehicles become less desirable wasting precious energy resources GM, will suffer until they change their ways. 

Currently, a bill being drafted in the U.S. House of Representatives, sponsored by Congresswoman Betty Sutton of Ohio would provide a $4,000 voucher good towards newer, relatively more fuel efficient vehicles if an older car is taken off the road. Unforuntately, fuel efficiency standards are still extremely modest when compared to mileage of other cars globally, coming in at a sheepish 27 mpg. 

The Consumer Assistance to Recycle and Save (CARS) Act (also known as Cash for Clunkers) will encourage consumers to purchase new American made cars with a minimum fuel efficiency level. While this is a good start, it really does not go far enough. I find it hard to beleive the government is willing to bribe us to buy new cars. Even further, that they introduced such meager stipulations which are easily acheived by most new car models. This proposal would hardly encourage steep rise in fuel efficiency standards which will only come with a burst of technology propelled by economic need. Many people are claiming this bill is a simple guise being used to encourage consumerism, by promoting the purchase of new automobiles. 

I do not think we will see the conclusion of this saga in our lifetime’s. America is too invested in the ‘road’ and the ‘highway’ to give them up, though they are ultimately pretty lousy ideas. I wonder how many square miles of our beautiful country is covered up by asphalt? Ideally, an amazing public transportation system would come about powered by sustainable energries such as wind and solar. But until that day, I hope we can drive safe, fun cars which do not wreak havoc on our atmosphere and have minimal impact on our environment. With China vying to become the leader in electric automobile technology, it is critical for America to begin commercializing these vehicles. It is my personal belief that battery powered cars fueled by renewable energies will be a great temporary solution to this grand challenge.