Al Gore. Inventor of the Internet. Climatologist. Now add auto industry expert to the list.
The Goracle raised blood pressures in Detroit Wednesday when he lectured U.S. automakers on their business model. A main reason “our auto companies are in trouble,” he told the Senate climate panel, is “they got all these gas guzzlers they can’t sell that people don’t want to buy.”
In December, GM rode the backs of double-digit sales increases in its big new Chevy Tahoe and GMC Yukon SUVs to turn its first quarterly profit in two years. Just last month, sales of its biggest gas-guzzler – the Chevy Suburban – were up a whopping 33 percent. Profit margins on light trucks run upwards of $7000 a vehicle, which is foreign makers have also been jumping into the SUV market.
Overall, of course, SUV sales were down last year due to higher gas prices (proving market conditions – not federal fuel mandates – move consumer choices), but that hurt Japanese as well as Big 3 makers. Sales of Toyota’s big Land Cruiser and Sequoia SUVs were off 30 percent, for example. The difference is that Toyota still makes money when consumers switch to their sedans, but struggling American cos. like Ford do not.
Why? Because UAW labor costs are a crippling $1500 per vehicle higher than their Japanese counterparts. That’s the very same union that plowed many of those labor costs into eight years of Gore/Clinton candidacies.