A Response To A Comment

One of my few readers left a comment in my recent post about Bob Lutz' opinion on the cost of raising CAFE standards. His comment was so whacky I thought I'd respond to it point by point. My reply in italics.

Anonymous said...

As an engineer myself, I'm quite dubious of your claims. Working in the auto industry as an engineer doesn't necessarily qualify you as a subject matter expert on mileage or CAFE standards or future locomotive technologies or for that matter, of thermodynamics.

Hey, it's my blog, and my opinion. If you think I'm an idiot, start your own blog! Being close to the problems, I think I do have something to say about fuel economy.

Throttling the Big Three on efficiency will drive innovation. Unfortunately, likely not from the Big Three. Unfortunately, your industry is one of the most lackluster at innovation. That includes your foreign competitors. GM has spent over $100 billion in research over the last quarter decade and for that we get .... what? A Chevy Aveo with lower MPG ratings than a Chevette of 1984. Look it up on the government CAFE web site. $100 billion sent a man to the moon and created entire new industries and technologies with the Apollo program. Yes, inflation makes it apples to oranges but....

Lackluster? What? Check out all the stuff we have that we didn't in 1984. Airbags. ESC. Seatbelt pretensioners. Rollover sensors. Computer simulated crashes. Self diagnostics of all types. Much of this was not driven by regulation, but by market competition. Do you have any idea how many microprocessors are used in your average car? How many thousands of lines of software code?

As for your Chevette, that is not a valid comparison. How much did that Chevette weigh in 1984? How much horsepower did it have? What was the 0-60mph time? Did the Chevette have power steering, power brakes, side impact beams, front and side airbags, etc., all of which add weight? The lowly Aveo is much more car than a Chevette, in every way.

Innovation will happen in transportation because its now out of your hands. It's in the hands of the world's scientists and entrepreneurs. You may incorporate the technology or with new advances in manufacturing, you may actually see small volume niche players eating your lunch as the landscape of innovation could easily create.

I'm not sure what you just said. Many of the world's scientists are working for automotive OEM's and suppliers.

By the way, CAFE standards in Japan and Europe are 2x what they are in the US and China is following suit. Better quit whining and start getting ingenious. Seems like they can sell cars in all three markets for substantially less than the average selling price in the US. Your $5000 claim is meritless. He was talking about America's stringent diesel emissions. Innovation will make that a nonstarter as well just as when Honda embarrassed the Big Three in the 1970s when they said they couldn't meet the emission standards and Honda ended up doing it without a catalytic converter.

Where did you get the idea that cars are cheaper in Europe and Japan than in the U.S.? Again, compare apples to apples. The average car in Europe or Japan is a "B" class car--about the size of a Civic or Corolla. That's the family sedan. Very few people can afford a "C" or "D" size car (Accord and larger). Many people drive "A" cars, such as the Smart. Full sized pickup trucks virtually don't exist--here they are the biggest selling vehicles (Silverado, F150).

Why is my $5000 claim meritless? You didn't give any example s of what things cost.

Sorry buddy. You need to go back to engineering school. Hey, if you are going to blog, be factual, be honest and expect negative feedback when you are wrong.

Sorry buddy, you need to learn how to argue. If you are going to comment on a blog, and call the blogger out, you had better bring some facts.

Ford Selling Volvo? Why?

According to a news wire story from Reuters, which picked it up from a Swedish newspaper, which got the news from an un-named Ford source, Ford is considering selling Volvo, and BMW is kicking the tires.

Uh, Whiskey Tango Foxtrot?

Ford doesn't report the Volvo financials separately, but the industry guess is that Volvo is probably the most profitable of the Euro-luxury brands. Volvo is also a leader in automotive safety technology, with a valuable portfolio of intellectual property. They are also a leader in environmentally friendly carmaking, another priority for Ford.

Would Ford really keep money-pit Jaguar and sell Volvo? And why would BMW want Volvo, after their sour experience with Land Rover? I am not sure I see how Volvo fits into BMW's portfolio--BMW's cars are sportier, and every bit as safe. They overlap considerably in price.

According to the news article, Ford could gain as much as $9 Billion on a sale of Volvo. That's a nice chunk of change, but then what? Ford would be left with a real hole in their product line-up, with no credible competitor to European luxury brands, with Jaguar being weak and too far upscale and Lincoln not yet a credible threat.

Man, those college professors and Vermont commies are gonna be pissed--BMW isn't what most of them would call a progressive company.

Inflation Adjusted Gas Prices

This chart, from www.InflationData.com , shows the inflation adjusted average annual gas price since the 1920's. What is interesting is the general downward trend since 1920 in the inflation adjusted price, with the exception of the oil embargo of the 1970's and the recent run-up. If the current bump smooths out, according to this trend line we should land somewhere between $2.00/gal in a few years. Or so I hope!

Shopping the Competition--At The Dealer?

Mark Tapscott comments on his blog about how GM is suggesting to Chevrolet dealers to rent a Toyota Camry to show next to the new Malibu.

Wow, that's ballsy. Good for GM. It could backfire, though--"Look, honey, the Camry has a much nicer..."

Ford was already doing the "taste test" ads where people supposedly like the Fusion better than the Camry or Accord... but putting the competition's car in the showroom takes it to a new level.

Tapscott wants them to go even further, and allow test drives of the main competition, like that insurance company that offers to let you shop the competition on their web site.

I'd be very surprised if that happened. Not just for cost or liability reasons, but what about credibility? Think of how this could be abused--the Chevy dealer could secretly sabotage the Camry, introducing squeeks and rattles, or knocking out the highest gear on the transmission to increase engine noise. If you had a bad Camry experience at a Chevy dealer, would you trust it?

Ethanol Backlash

There's a good piece here about the rising back-lash against corn-based ethanol mandates. The government is now finding out that mandating more ethanol is putting pressure on corn prices, which has some undesirable unintended consequences. Such as more expensive feed for livestock, which will translate into more expensive meat; more expensive corn syrup, which is the cheap sweetener of choice in just about every commercial food; more planting means more land use and more pesticides.

Corn ethanol seemed unstoppable, but a remarkable thing happened on the road from Des Moines. Just as the smart people warned, the government's decision to play energy market God and forcibly divert huge amounts of corn stocks into ethanol has played havoc with key sectors of the economy. Corn prices have nearly doubled, which means livestock owners can't afford to feed their animals, and food and drink manufacturers are struggling to buy corn and corn syrup. Environmentalists are sour over new stresses on farmland; international aid groups are moaning that the U.S. is cutting back its charitable food giving, and many of these folks are taking out their anger on Congress.

...

Things are even hotter in Washington, where lobbying groups are firming up their positions against corn ethanol. The hugely influential National Cattlemen's Beef Association has gone so far as to outline a series of public demands, including an end to any government tax credits (subsidies) for ethanol and an axe to the import tariff on foreign ethanol. Put another way, the cattlemen are so angry that they are demanding free markets and free trade--a first.

Those wacky cattlemen.

Once again, a great example of how poorly considered government rule-making can distort the market.

If we really wanted to increase ethanol use, we would drop the tariff on imported ethanol, a whopping $0.54 per gallon. We could then import Brazilian ethanol, which is made more cheaply than our own. But the truth is, the ethanol mandates are mostly a farm lobby pay-off.

Celebrating The First Anniversary of Our Online Presence

Syd's Eastside Auto Parts, Used Cars & Rebuilders has now been online at http://www.SydsAutoParts.com for over a year. Our website has grown and expanded with our business.

Syd's Eastside Auto Parts, Used Cars & Rebuilders had previously been online for 8 months or so prior with a packaged website that allowed visitors to search our inventory, but didn't allow e-commerce and wasn't customizable. Interest in our auto parts offerings quickly grew and that's why we created our own custom professional website with full search capabilities cross indexed for interchangeable parts and full, secure e-commerce capabilities.

In the past year we have added website functionality and expanded our business:

1. Added licensed Hollander Interchange cross-indexing to show all available interchangeable parts across makes, models and years in our Online Auto Parts Search Results.
2. Continued to keep and maintain an up-to-date catalog of our available Used Cars and Trucks For Sale offers online through the website.
3. Added E-Commerce functionality with a secure Shopping Cart for online auto parts shopping.
4. Offered New Aftermarket Auto Parts through our toll-free ordering service.
5. Added a Featured Parts & Products Showcase to allow us to highlight some of our available tools and products, as well as showcase our new and used auto parts.
6. Expanded our business to offer Aftermarket Caterpillar Diesel Engine Parts.
7. Added a section for our Heavy Equipment & Machinery offerings.

Remember that we are no longer just a salvage yard and now offer new aftermarket automotive parts and aftermarket Caterpillar diesel parts.

We look to further expand our product and service lines further to better accomodate our customers in the future. We certainly hope that you will be pleased with the results.

Thanks to our customers and suppliers for our past and continued success!
-SydsEastside

Chelli's Bentley

Yesterday, on Southfield Road, I pulled up next to a shiny black Bentley Azure convertible, like this one:


Driving it, slowly, and chatting on a cell phone was (if I recognized him correctly) Chris Chelios, the senior defenseman from the Red Wings, and owner of Chelli's Chilli Bar restaurants.

It doesn't really matter to me what our local celebrities drive, as I don't care much for celebrity one way or another, but it was neat to see a Red Wing and his wheels.