“A business model based on a gas-guzzling past is unacceptable,” roared Sen. Charles Schumer (D., NY) during the Detroit Three bailout hearings. “We need a business model based on the cars of the future.”
Well, the sales figures for November are in, and light truck sales jumped to 52 percent of the market last month, returning trucks to the majority share of the U.S. market. That’s a three percentage point jump over October, and a whopping seven points above July sales. Why? Because gas prices have plummeted from over $4 a gallon to under $2.
Of course, if Senator Schumer really wanted to encourage the fuel-sippers of the future, he’d jack federal gas taxes to $3 a gallon to permanently adjust consumer buying habits to $4 a gallon (and above) gas. Europeans suffer under this surcharge every day, meaning that — even in these cheap-oil times — their gas prices have dropped to a mere $5.50 a gallon. As a result, sedans claim over 90 percent of European sales.
But even if Schumer and fellow green zealots were politically suicidal enough to follow the Euro example, it would have the effect of reducing auto company profits. And isn’t making the Detroit Three profitable again the reason for loaning them billions in taxpayer dollars?
“For better or worse,” whines the Detroit Free Press, “domestic automakers still sell hundreds of thousands of trucks each year and depend on those vehicles for profits.”
It takes a certain kind of worldview to find a “worse” in profitability.
Still, even assuming the Detroit Three get as far as 2011 and begin to realize the $1,500 per-car labor savings of new UAW contracts, the automakers would still only make $2,000 per small car, at best. Contrast that with the average SUV, which clears $5,000 per sale.
Once again, Washington is at odds with itself. It wants to save U.S. automakers with billions in taxpayer dollars at the same it wants to save the planet at a cost to automakers of billions of dollars.