no third solution

Blogging about liberty, anarchy, economics and politics

Nowhere to Go but Down

June 2nd, 2006

Detroit-based automakers, famous for their egregiously enormous environmentally-challenged (do you like alliteration?) full-sized trucks and sport-utes, has been taking a pounding in the proverbial pocketbook (seriously, I’ll stop now) lately. As I’ve noted before, GM doesn’t make a single vehicle that anyone wants to buy. This is problematic for a company with 60+ vehicle platforms. Chrysler has been doing marginally better with the launch of its recent nouveau-flagship, the 300. And Ford has been doing so-so with its line of eco-friendly vehicles. But the cash-cows for all three companies are the gas-guzzlers. Rising crude prices do not bode well for the Big Three. It’s beginning to show:

Automakers with a strong reputation for fuel-efficient vehicles posted big gains in the market. Monthly sales were up 17.0% for Toyota Motor Corp. and 16.1% for Honda Motor Co., a fierce performance in a down market.

Truck sales, meanwhile, were little comfort to any of the local automakers. Sales of pickups, SUVs and vans were down 14.9% at Chrysler, 10.2% at GM and 6.7% at Ford

And this is just the beginning of the decline, provided gas prices don’t return to pre-9/11 levels anytime soon. As leases and financing terms expire, as people stop delaying the purchase of a new car, the trend described above will continue. The demand for gas is more elastic over time, when people are able to adjust their driving habits, the vehicles they use, etc.

One woman quoted says she plans on budgeting $200/month for gas, and she drives a Grand Cherokee. I sure hope she lives very, very close to her work and school. My (smaller) Jeep Liberty currently requires about $55 to fill up the tank, and I go through about 3 tanks of gas a month, and I live 7 miles from work, my school is 1.5 miles from work, and my girlfriend’s place is 4 miles from school, 2.5 from work, and about 11 from home. I can barely get by on driving 200 miles a week. Most people in this area can’t even come close.

Besides, people don’t laugh at girls who buy a Toyota Prius.

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no third solution

Blogging about liberty, anarchy, economics and politics