http://www.washingtonpost.com/wp-dyn/content/article/2009/05/19/AR2009051901404.html
They are at it again. This time with fuel efficiency mandates by 2016. Now, for the "little 3" if they took the government cash, do they get to tell the President that this will make their cars less affordable?
What if you built a car that achieved good gas mileage and no one bought it? Would the world be a better place?
How will these companies deal with their most pressing problems - union commitments - and still invest money into remaking a product line and brands?
Can they actually build a car that people would want at a price they are willing to pay - and still be compliant?
What is the "flexibility" in compliance the piece mentions...
How do they get the $600 per car in extra production costs back without price increases? Will the UAW on their Boards actually let them cut jobs, wages or labor costs in general? Don't those guys have a conflict?
I would not run out and buy Chrysler or GM stock now... but hey, that's just me.
Brian
On a related topic, remember last summer when gasoline cost about the same as a decent chardonnay? "Increase in global demand" was one of the justifications. Unless I missed something, "global demand" is on its knees and OPEC has no production restrictions in place. So why the sky high price of gas? Speculators. Bidding the price up, and they'll short it all the way down. Wonderful. BB
Posted by: Bruce Burlington | 05/20/2009 at 02:36 PM
Bruce - thanks. I track both the barrel price for oil - along with the Dow and NASDAQ. The graphs run the same. Oil / Natural Gas prices have nothing to do with costs - and everything to do with what the market will bear. The prices reflect the next 6 months, not the current month. Speculators are betting on the business cycle - that determines if they will sell their contracts. You came up with a great idea for this a while back. Only allow contract sales when the inventory is taken. That eliminates people who can't take possession (other than on paper). That would return prices to the real world.
Posted by: Brian | 05/20/2009 at 07:06 PM