Planet Gore

Friedman Follies

Detroit, Mich. – Just coming onto the Pollowitz/Friedman battlefield to shoot the wounded. . . .

A doctor cannot prescribe a remedy unless he understands the illness. But Friedman continues his habit of misdiagnosing his domestic auto industry patient.
“How could these companies be so bad for so long?” he says. “Instead of focusing on making money by innovating around fuel efficiency, productivity and design, GM threw way too much energy into lobbying and maneuvering to protect its gas guzzlers.”
Friedman’s diagnosis assumes that Toyota and Honda have made strides in the U.S. market due to making fuel-efficient cars. It is a false assumption.
It is true that U.S. Japanese fleets were made up largely of small cars — but that was 30 years ago (and libs accuse conservatives of living in the past?). Since then, Toyota and Honda have invested millions into providing a full range of fleet options to U.S. consumers from giants SUVS (Toyota Sequoia, Honda Pilot) to gas-guzzling trucks (Toyota Tundra, Honda Ridgeline) to luxury cars (Toyota’s Lexus division, Honda’s Acura line). That is how you gain double-digit U.S. market share. And, like the Big Three, the Japanese made fistfuls of money — up to $80,000 per sale — off these big vehicles.
But, unlike the Big Three, Toyota and Honda were also making money on smaller cars like the Toyota Corolla or Honda Civic. Why? Because — and this is the fundamental sickness that Friedman ignores — Big Three union wage and benefit costs were $1,500 more per vehicle than their non-union Japanese competitors.
So when gas prices spiked, Toyota and Honda made less money — but they were still making $1,500 on their Corollas and Civics. The Big Three, meanwhile, made nothing on their compact Chevy Cobalts and Ford Focuses. Zero. Nada.
Clearly, the answer is not forcing the Big Three to make more small cars as Friedman and his Congressional allies demand. “Now that the price of gas is below $2 in some areas of the country,” writes veteran auto analyst David Cole, “there will be far less demand in the short run for fuel-efficient vehicles that the government wants the automakers to sell in greater quantities.”
The answer lies in forcing the companies into receivership so that they can fundamentally address their uncompetitive labor costs, brand structure, and overstuffed dealer networks so that — one day — they can make money on all cars in their fleet.
Reorganizing to craft a business model that makes money? What a concept.

Henry Payne — Henry Payne is the auto critic for the Detroit News.

Most Popular

PC Culture

Hate-Crime Hoaxes Reflect America’s Sickness

On January 29, tabloid news site TMZ broke the shocking story that Jussie Smollett, a gay black entertainer and progressive activist, had been viciously attacked in Chicago. Two racist white men had fractured his rib, poured bleach on him, and tied a noose around his neck. As they were leaving, they shouted ... Read More
U.S.

White Progressives Are Polarizing America

To understand how far left (and how quickly) the Democratic party has moved, let’s cycle back a very short 20 years. If 1998 Bill Clinton ran in the Democratic primary today, he’d be instantaneously labeled a far-right bigot. His support for the Religious Freedom Restoration Act, the Defense of Marriage Act, ... Read More
Politics & Policy

The Strange Paradoxes of Our Age

Modern prophets often say one thing and do another. Worse, they often advocate in the abstract as a way of justifying their doing the opposite in the concrete. The result is that contemporary culture abounds with the inexplicable — mostly because modern progressivism makes all sorts of race, class, and ... Read More
PC Culture

Fake Newspeople

This week, the story of the Jussie Smollett hoax gripped the national media. The story, for those who missed it, went something like this: The Empire actor, who is both black and gay, stated that on a freezing January night in Chicago, in the middle of the polar vortex, he went to a local Subway store to buy a ... Read More
Elections

One Last Grift for Bernie Sanders

Bernie Sanders, the antique Brooklyn socialist who represents Vermont in the Senate, is not quite ready to retire to his lakeside dacha and so once again is running for the presidential nomination of a party to which he does not belong with an agenda about which he cannot be quite entirely ... Read More
Film & TV

A Sublime Christian Masterpiece of a Film

‘There are two ways through life -- the way of nature and the way of grace,” remarks the saintly mother at the outset of The Tree of Life, one of the most awe-inspiring films of the 21st century. She continues: Grace doesn’t try please itself. It accepts being slighted, forgotten, disliked, accepts insults ... Read More
PC Culture

Changing Reality with Words

The reinvention of vocabulary can often be more effective than any social protest movement. Malarial swamps can become healthy “wetlands.” Fetid “dumps” are often rebranded as green “landfills.” Global warming was once a worry about too much heat. It implied that man-made carbon emissions had so ... Read More