Car companies – which mostly sell crossovers now, so the term “car company” is a bit dated – are in a tough spot. They have malinvested heavily in compliance cars because they bet that compliance was the way forward.
When the Biden Thing’s regulatory apparat issued its decree – which is what a “regulation” amounts to – that every car company’s fleet (i.e., all of the models its sells) most collectively average just shy of 50 miles-per-gallon by about two years from now, the car industry made plans accordingly. An example being Toyota’s decision to not only stop offering a V6 engine in the very popular Camry sedan – one of the relative handful of cars still available – but also hybridized the four cylinder engine it now comes standard with.
The only reason Toyota dropped the six and hybridized the four was for compliance reasons. And this is not to single out Toyota. It is merely to cite one example of the compliance effect.
There are many other examples. The entire car industry has become an example. It bases all of its decisions – and mainvestments – on compliance rather than customer. That is because the regulatory apparat has become the main “customer.”
This process has been in process for decades; it did not start under the auspices of the senile old grifter and his latte-colored Communist understudy. But it did accelerate markedly under the auspices of these two. The 50 MPG decree being a stunning case in point. The previous mandatory minimum was around 34 MPG – still obnoxious in principle as it is none of the legitimate business of a free country’s government to decree any mandatory MPG minimums. If you live in a free country, you ought to have the right to buy a vehicle that gets whatever miles-per-gallon suits you.
Because that is no one else’s legitimate business. It’s your car – and your money. Including gas money.
Somehow – back in the ’70s – it became the federal government’s business. More finely, it became the business of the federal government’s regulatory apparat. It began to decree how many miles-per-gallon the cars (and later, trucks) made by the car companies would be required to deliver, interposing itself between car seller and car buyer. The effrontery of this is quite something but we have gotten used to it as “normal” – much as we have gotten used to being frisked and felt-up and having our property rifled through by government geeks at the airport has become “normal.”
At first, the compliance effect was subtle and hardly felt. But – if you were around back in the ’70s – you’d have noticed that cars were getting smaller and different. Rear wheel drive – which was the way most cars were once made – was gradually being supplanted by front-wheel-drive. Because front-drive cars have fewer parts and lighter drivetrains, which helps them get higher gas mileage. Engines began to get smaller, too. By the 1990s, a 5.0 liter V8 was considered a “big” V8. Twenty years prior, seven and even eight liter V8s were common.
And only economy cars came with four cylinder engines.
This trend began to reverse – remarkably – by the late 1990s and into the early 2000s as engineering found ways to outfox compliance. Big cars – and SUVs and trucks – that got better mileage than their antecedents began to appear. So did big V8s, some of them pushing seven liters again.
The regulatory apparat saw – and was angered. It was not enough that the engineers had figured out how to design high-powered engines that were also remarkably fuel efficient and “emitted” no meaningful pollution. In fact, it was precisely the problem. The apparat wanted fewer – ideally, no – cars in the hands of the masses and most definitely no cars with engines in their hands.
And so the apparat decreed the 50 MPG mandatory minimum – a Great Leap Forward of some 20 miles-per-gallon – knowing it would checkmate the engineers. Because there is only so much that can be done to make an engine more “efficient.” Put another way, there is no realistically feasible way to make an engine that “efficient.”
Not by itself, at any rate.
And that is why all-of-a-sudden there are all of these turbo-hybrid-plug-in four cylinder engine’d things. And also all of these battery-powered things. For which there is little market but much mandate.
This is the compliance effect manifested.
Now, having committed to all of this compliance, the car industry finds itself hemorrhaging customers. Overall sales are down by more than 2 million since the high of 2017 and this can be attributed to new cars becoming increasingly unaffordable as well as unappealing (often both) to millions of people.
Rendering them more affordable and appealing again (examples include the $13k Toyota HiLux Champ) would entail a reversal of the industry’s policy of compliance. It would also involve accepting massive losses – as from the industry’s malinvestment in compliance cars. As well as the massive expense involved in engineering new vehicles that are not “compliant” but are appealing – assuming the car companies are willing to make them again.
Will they decide to cut their losses – and accept these expenses? Or will they fight against the dialing back of the compliance regime, having malinvested in it so heavily?
Toyota seems to be willing. The company’s North American COO, Jack Hollis, said the other day that compliance cars are “not in alignment with consumers” and that the “de facto mandates are out of line with current consumer demand for electric cars.”
But what about the rest?
Is there enough life left in them to resist the compliance effect?
. . .
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Could not believe I saw a Tesla truck driving down the road the other day. And in our small town of less than five thousand! It was uggggly as the pictures I’ve seen. Have seen a few Tesla cars but first time to see a truck. Stupid.
Also see a handful of Crown Vics around town. Some of them look in very good condition. They are the goldish color. Do see some trashed ones too, lol.
My parents had one of the gold ones until my mother got t-boned. It was like new, a very comfortable ride.
Love seeing the old car advertisements in old Nat Geos. They are so cool and they are all about the fun of driving, pictures of the kids sitting all over the place, not buckled in. The car company telling the consumer, all the different options they have in engines and colors.
Good times.
Car companies will have to either fight back or die!
https://www.barrons.com/articles/evs-tariffs-trump-auto-emissions-fbabeade
https://www.msn.com/en-us/money/companies/ar-AA1uSqeB
Selling at the frenetic pace of being a global leader in your industry is hard. Especially when your labor force just got a 25% pay increase on the last contract, is aging rapidly (blowing up the health insurance plans), and you’re up against Southeast Asia, where they have something to prove. Let the market shrink. They’ll just produce brand loyalty.
Just like Apple.
Until NVDA took over, Apple’s $3.37 trillion made it the most valuable company on Earth. They didn’t even have to be the dominant company in their product lines. iOS only has 28% of the cell phone market, the Macintosh holds 15% of the desktop PC market. The only product line where they hold a majority is the iPad, but that’s really not comparable to the phone and PC market size.
The big 4 business plans are too hard. They have a great deal of sway in Washington and that’s been what keeps them alive, but as we’ve seen, with the instability and potential for regulatory changes with the administrations, that’s not going to be something that can be relied on forever. Eventually someone will figure out a loophole and build Chinese or Indian style cars in the US. Probably with a “lights out” factory in the Deep South or some other depressed area. That puts them right back to where they were in the 1970s, watching an emerging market with brand new factories undercut them. But if they can position themselves as a high margin brand, which I believe they can do by promoting to their base of hardcore logo fan boys, then maybe they can play the Apple game too.
I had no idea that back in 2014 it would be the last time I bought a new vehicle. They no longer make a vehicle I want! All the driver assistance/safety/climate change crap on them is just awful! As I side note, I was getting a new windshield installed and overheard the scheduling lady talking on the phone. Someone had a 2021 Toyota Highlander, and it was going to cost over $1,0000 to replace the windshield! Why? Because it had the driver assistance crap and they would have to “re-calibrate” the stupid camera that controlled the stuff. MADNESS, I SAY!!!
I think the car companies could have nipped this in the bud by tacking the “gas guzzler tax” , which was the cost of non-compliance, onto the price of the car. Then take out full page ads in the auto magazines and newspapers explaining to the consumer that govco is responsible for the increased price of their vehicles. Get enough pissed off people to call their Clowngress critters and they could have made the beuaracrats back off.
Quote of the day goes to Jim Quinn of the Burning Platform:
‘We know for a fact the average price of a new vehicle is up 130% ($48k vs. $21k) since 2000, while the government reported increase reflected in the CPI is 25% – because you can now push a button and heat your ass.’
Mwa ha ha ha … Jim’s talking about hedonic adjustment of prices. BLS bean counters treat stuff we didn’t ask for — lane keep assist, multiplying airbags, menu-based Clownscreens — as quality improvements.
So, ‘adjusted’ for all these wonderful new features, the price of cars hardly went up at all. Sha-ZAY-uhm, as ol’ Gomer Pyle used to exclaim. Who coulda kno-o-o-o-o-wed?
It’s like the guy in Queens said to the Fed minion about hedonic adjustments – “you can’t eat an iPad”.
I keep reading how, in Germany, the automakers are getting slammed doubly. Because, first of all, yes, they have the situation described in this article. Maybe not as bad as in the USA because Germans are not right in the head and go for stupid shit because the lunatics running their government say so. All that WW2 guilt is a powerful tool for their masters.
But, doubly, because (albeit along the same lines) the German government is forcing their country to commit industrial suicide. They can’t have Russian gas, and they shut down the nuclear reactions, and apparently think they can run their country on eurofaggotry.
Rainbow power in Gaymany… doesn’t seem to be working so well.
Maybe a triple whammy. Because everything is now costing a fortune, not just automotive devices. Pretty hard to spend those Euros on stupid-expensive devices, when eating and not freezing to death become the primary challenge.
Seems that the VAG (-ina) has been pounded the hardest! ROFL They’ve laid off like 11,000 recently, and there are pictures on the internet of lots full of new VW/Audis there in Germany.
But, the Chermans, being much smarter, more sophisticated, and just flat out better (and gayer) than the rest of the world have a found a solution! Ban the opposition party outright before the collapsing government wraps up and elections come.
They should also try triple masking their manginas. It will help them to keeping bending over and taking it.
Olaf the euro monkey tips his tiny cap to the ladies:
https://ibb.co/Q9mK0ns
I have no sympathy for them. No doubt they employ an army of lobbyists. And no doubt there’s a revolving door from government to industry. And yet they still decided to dance with the devil. Screw ’em.
Getting in bed with the wrong people may result in contraction of “exotic” diseases.
I think what automakers would need to do is bring out propr year car designs and manufacture them in the next model year changeover. Their designs are still on the mainframes. Manifacturers typically do a small shutdown during model year changeover, so by 2027 they might be making some of thhe neew old stuff. Or they could import some of their world markert stuff that might pass here in the interim.
They do have some options.
Happy Thanksgiving everyone!
My wife wants a new (to her) car and for the first time in 20 years says she doesn’t want modern trendy, she want a classic daily driver. I asked her about the image she used to be concerned about for work and such and she replied that she no longer cares what other people think. So I get to go classic car shopping. 🙂
Well, Merry Xmas, Happy Birthday/Hanukkah,/New Year and every other holiday!!! You got lucky with wives and now you can go get a 60’s or 70’s land yacht with a 7 or 8 Liter engine with 4 Barrel Carburetor’s. Get a Hard-top with the crushed velour seats, and a tilt n telescoping steering wheel! Two or four doors or a wagon!! Good luck, the choices are endless, if much more expensive then way back when they were new, sadly…
The funny thing is the writing was on the wall of a possible change in government and they didn’t plan for it? As that old saying goes “Failure to plan is planning to fail”.
If GovCo rolls regulations back to the previous standards all those engines from a couple years ago could be sold again. It would just be a matter of fitting them into a newer body style.
If hot rodders can fit a 427 into a Fiero I’m pretty sure Toyota can figure out how to put a V8 into a 2025 Tacoma.
The nefarious desires of the GovCo leadership does have, and has had, the goal of ending the Freedom of private transportation ownership. However, I think there might be a more basic attitude among the Apparat. It was most succinctly stated by Gov. Lepetomane as played by Mel Brooks in Blazing saddles, “We’ve got to protect our phony baloney jobs!”
It becomes a matter of self-preservation at our expense and that of the goose that lays the golden eggs they consume.
https://www.youtube.com/watch?v=uTmfwklFM-M
It is time to DEREGULATE the cars!
The industry is starting to collapse.
The warnings have been around for awhile.
https://cei.org/opeds_articles/auto-industry-and-motorists-prime-victims-of-governments-over-regulation/
Latest regulation
https://cei.org/opeds_articles/auto-industry-and-motorists-prime-victims-of-governments-over-regulation/
‘Now, having committed to all of this compliance, the car industry finds itself hemorrhaging customers.’ — eric
Therefore, the car industry’s weaker members must be culled. Nissan death watch:
‘After posting net losses earlier this month, Nissan CEO Makoto Uchida said the “extremely tough situation” will force some bold restructuring moves.
‘According to a new report by the Financial Times, unnamed senior officials near Nissan note that the automaker is beginning to exist on borrowed time as it seeks an anchor investor to get it through the year.
“We have 12 or 14 months to survive,” the senior official told FT. “This is going to be tough. And in the end, we need Japan and the US to be generating cash.”
‘The company is looking for a new long-term investor, such as a bank or large insurance group, to replace some of Renault’s equity holdings. However, it hasn’t ruled out the possibility of longtime rival Honda taking a majority stake in Nissan.
‘A recent report from Automotive News says that Nissan told its suppliers that it expects to cut production in its US facilities by 17% during its 2024 fiscal year, which ends on March 31, 2025.’
https://www.msn.com/en-us/money/companies/ar-AA1uSqeB
Looks like a race to the bottom between Nissan and Stellantis: who will file BK first?
HO-HUM … *blows another lazy smoke ring*
Who cares about y’all’s shit cars, designed by EPA and NHTSA ‘crats?
Morning, Jim!
Yup. Nissan was – is – among the heartiest of compliance car manufacturers. How much has been lost on the Leaf? And the Ariya? Nissan also utterly failed when it ruined the Frontier – which had been a yuge seller until it was turned into a too-big, too-expensive truck people like me (and there are many like me) do not want or aren’t willing to spend $30k-plus on.
Both of us, as owners of the last generation of Frontier compact trucks, deplore that they are not on the market anymore — at least not in Fortress America, where ‘simple and cheap’ are as anathematized as Putin and Kim.
Is Nissan too big to fail? Will Japan bail them out, restructuring their debt at more favorable interest rates? After all the Bank of Japan really screwed up a lot of companies by raising interest rates back to positive. Any fool could get a free money loan, one that had to be spent, from BOJ. I wish I could get that deal, I probably would still be running my company instead of punching a time clock and shitposting here. Run out of money? No problem, just get another loan… and another to refinance the old loan while you’re at it. Ben Bernanke was so jealous.
The bigger question is what will the new Treasury secretary have to say about TBTF? We know that Trump is big on protecting home businesses at the expense of consumers, but how will that play out? The big three have lots of manufacturing in Canada and Mexico after all. Will they get to carve out their exceptions or will we be starting a continental trade war? And what happens when they still manage to screw up and need a bailout?