Washington miles-per-gallon regulations do not work. Market price signals do. The evidence? April car sales.
Since 2007, when George W. Bush (applauded by one Sen. Barack Obama) signed into law a 40 percent increase in federal fuel-mileage standards mandating — mandating! — that automakers sell more small cars that average 35 mpg, the mix of vehicles in the U.S. market has gone in exactly the opposite direction. As America climbed out of the Great Recession of 2009, sedans owned a 55 percent to 45 percent market-share advantage over light trucks. By February of this year, that percentage had nearly flip-flopped with SUVs outselling sedans with 53 percent of the market.
Then last month it flip-flopped again. What happened? More regulation? A 50 mpg mandate? Nope. Four-dollar-a-gallon gas happened.
“Rising fuel prices have led many to rethink their vehicle of choice,” said Don Johnson, GM veep for U.S. sales.
But wasn’t Washington correct in foreseeing higher gas prices and forcing companies like GM to build electric hybrids? Aren’t Obama, John Dingell, and green Michigan guv Jennifer Granholm vindicated in calling these the cars of the future? Nope again.
Customers flocked to GM for smaller cars in April. But they weren’t hybrids and electrics. Indeed, sales of hybrids actually dropped from a year earlier — to a minuscule 2.2 percent of the market (compared to 2.4 percent in April 2010).
Sales of the plugin Chevy Volt actually dropped. GM’s hybrid Chevy Malibu sedan sold — wait for it — five cars. Meanwhile, Chevy sold 24,000 — that’s thousand — gas-fueled Malibu sedans. And it was the Chevy Cruze — the $40,000 Volt’s platform-mate that sells for half the price — that was the General’s star seller at a healthy 25,000 units. More than the vaunted Toyota Corolla. Nearly even with the legendary Honda Civic.
It turns out that Obama’s Volt is a nice — if expensive — piece of window-dressing designed to game Washington edicts. Meanwhile, actual consumers want cheap, gas-powered sedans to help them battle rising pump prices. Better yet, GM can actually make money on the Cruze thanks to its massive cuts in Big Labor benefits that have slashed the Detroit giant’s labor overhead.
Read more at The Michigan View here.