Loc: Pinellas Park, Florida
The SUVs are their cash cows (at least in their understanding). I've seen many efficient cars in other countries that won't pass safety measures that are required here. I agree that things can be sped up here to get cars like these into production. Also, people need to have some motivation to buy them rather than the stuff we're hyped into buying so we can pad some executive's bank account.
Loc: Sunnyvale, CA mostly
Well, that's not entirely true. Automotive should be fully horizontally and vertically organized and integrated at this point, its ecosystem fully networked, digital, in realtime, all fully enterprise integrated, so any new flex manufacturing should be on a pretty quick cycle. They just need good ideas.
Instead of such braindead ideas as launching the design of their new/evolutionized large SUV platform in April 2008, at about the same time as the platform plunged off into total freefall - Now, that was for a 2009 delivery launch target, so it's pretty evident these guys can be quick. It's just that these guys are terminally, morbidly stupid, and want a third chance at stupidity. Quick to stupid - Slow to smart.
Although these guys this time around have to throw some thoroughly original radical new stuff on the plate, to hit the sweet spot that best befits the market and times, i.e., extremely highly fuel efficient small platform rigs for the interim, and algae fuel/electric hybrids, whatever (anything but biofuel stupidity) for the more frequent regular oil shocks and eventual peak oil shock.
And this is the part that automotive (well, everybody, really) has to get: Peak oil is the problem. With this temporary alleviation, in the form of lower prices, any economic rebound (increased demand) will rebound a corresponding price shock (from static capacity). This spasticity will be common. And the capacity/demand isn't going to improve significantly.
Hopefully, these guys will recognize that the big global downturn is caused primarily by oil and secondarily housing and financial bubbles deflating. Energy is the thing. And if these guys hit that sweeptspot, they'll be in the catbird seat.
Defaulting mortgages are only a symptom of the high oil prices. The fault is the underlying cause--higher oil prices--rather than the symptom. These higher oil prices caused Japan and the Eurozone to enter into a recession even before the most recent financial problems hit. Higher oil prices started four of the last five world recessions - It's no surprise that it started this one also.
Rising fuel, energy and food bills eroded the spending power of lower income groups causing the debt and discretionary spending problems. This is the needle that pricked the credit expansion and housing bubble. These bubbles inevitably burst of course, but would have been later.
How does a collapsed San Diego housing market cause recession in Japan and the Eurozone? Oil shocks create global recessions by transferring billions of dollars of income from economies where consumers spend every cent they have plus some, to economies that sport the highest savings rates in the world.
While those petro-dollars may get recycled back to Wall Street by sovereign wealth fund investments, they donít all get recycled back into world demand. The leakage, as income is transferred to countries with savings rates as high as 50%, is what makes this income transfer far from demand neutral.
Also, the dollars involved in the oil price shock are much greater than the real estate would have on the economy. No matter how you slice it and dice it, the economic cost of the recent rise in oil prices is fricking staggering. A lot more staggering than the impact of plunging housing prices on housing starts and construction jobs, which has been the most obvious brake on economic growth from the housing market crash. And those energy costs, unlike the massive asset writedowns associated with the housing market crash, are borne by Main Street, not Wall Street, in both America and the rest of the world.
It takes about a year for an oil price shock to have its maximum impact on US GDP, so, given that oil prices really took off in the third quarter of last year, after several years of more gradual increases, that maximum hit should be right about now, however, the boost to the economy from the decline in oil prices won't hit until well into 2009, and it will be a false buoyancy followed by downward spasticity. There's a barely functioning financial system that governments around the world are trying to bail out, a vastly oversized financial services industry that needs to collapse to a more reasonable size, and nonavailable credit. In addition, the US has 2/3 of its GDP in services, with deflating bubbles set to burst and retail one holiday away from death spiralling.
And so, the problem with nonavailable credit, particularly long-term debt, is ultimately tied with peak oil. It is difficult to have more than a tiny amount of long term debt once an economy is no longer growing. Repaying long-term debt is easy in an economy that's growing, with greater funds in the future; however, in a declining economy, there will be defaults, or repayment with devalued dollars, so though low rates is the fix, it's hard to see how lenders operate without high rates when oil is so costly.
I repeat: And this is the part that automotive (well, everybody, really) has to get: Peak oil is the problem. With this temporary alleviation, in the form of lower prices, any economic rebound (increased demand) will rebound a corresponding price shock (from static capacity). This spasticity will be common. And the capacity/demand isn't going to improve significantly.
High energy prices will be an essential part of building a bridge to a sustainable future, needed to provide investment in new fossil fuel resources and alternative energy. National governments need to accept that the prosperity brought by free flowing energy from the heritage supergiant oil and gas assets is now gone, and we face a future where a greater proportion of incomes will be used on energy for survival purposes. A new automotive bubble should be part of that bridge, but it boils down to whether you really trust these GM morons to be able to pull that off? Now, Ford is a different matter, their new CEO, Alan Mulally, is the rare transporation CEO that is actually a brilliant transporation guy informed from the bottom to the top.
Prior to 2004, a rise in demand could be met by OPEC bringing on spare capacity (opening the taps), but since then demand growth could only be met by bringing on line new capacity - Discovering and building out new fields - Drilling wells, building oil processing plants and pipelines. This is time consuming and expensive in terms of capital and energy used. This is also dependent upon oil companies discovering new oil fields to develop, which they have not been very good at for decades. Fields are tapping out faster than new sources can fill in the gap. Oil has a composite figure of 4.5% production decline - This is a composite of the fields in decline and the new fields where production still rises. The oil exporting countries themselves become their own growing consumers as their economies ascend, with their growing slice shrinking the rest of the pie available.
So, obviously, oil dependency is a business model component that devours the business model. The same can be said for the braindead energy-intensive schemes: Bio fuels, CCS Carbon Capture and Storage, and hydrogen fuel cells. The financial, intellectual and energy capital spent on these braindead schemes that will produce nothing worthwhile and would be much better spent on viable energy production, energy efficiency and electric transportation schemes.
Energy efficiency is the big nut but not the whole nut, new energy sources have to come into play, and this combination is the most veracious key new bubble with the most potential to exploit. Automotive's part of this key new bridge is too tall of an order for the GM dimwits - They can't hack it. Their behaviour now, with their hand out, is no different than their response to the first Japanese invasion - They wasted a ton of money (which they fortunately no longer have, or else they would buy their way into further stupidity) on a legal offensive, instead of an engineering and design offensive.
If you really do care about the welfare of the automotive ecosystem, condemning them to a cancer seems kinda counterintuitive.
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