Political Landscape to Force Automakers’ Hand
March 22nd, 2007 | by Brian Carr |Now that green is in, it appears that the United States Congress, as well as President Bush, is ready to force auto manufacturers to bring more fuel efficient vehicles to the market.
In an article published in Wednesday’s Washington Post (you need to register in order to be able to read the article), Sholnn Freeman writes:
“The auto industry is facing one of its toughest political battles in years as shifts in the political and business landscape have eroded its defenses against stricter fuel economy standards.”
As a side note, I think the funny thing about this article is there’s a picture of President Bush touring a Ford plant in a Ford Explorer, one of the automobiles that epitomizes the gas-guzzling SUV era. But I digress.
Freeman goes on to reference President Bush’s State of the Union address, where Bush outlined a plan to help reduce American gasoline consumption by 20% over the next decade. Part of that plan includes increasing fuel economy standards for new vehicles by 4% annually during the next ten years.
Unfortunately, the auto industry isn’t exactly thrilled about this new found determination to increase fuel economy standards, and, as usual, the reason boils down to money. Now, if Congress were to provide some nice incentives, I’m sure these car manufacturers would probably be a little less resistant.
What I don’t understand is why these car companies, especially the American car companies, seem so resistant to making these changes. It’s fairly obvious that people are becoming more aware of their role in the growing environmental problems, and that more and more people would like to lessen their impact by buying more fuel efficient vehicles.
So, instead of continuing to produce massive trucks and SUVs that sit unsold on car lots for months and months at a time, wouldn’t it make business sense to produce what’s selling?
It doesn’t take an MBA to see that Japanese auto makers are drastically taking the market share of American cars - and a large part of that reason is because the Hondas and Toyotas get much better gas mileages than the Fords and the GMs.
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