Why I’m buying a Toyota
There is a great debate about whether the Canadian and American governments should give emergency financial aid to the Big 3 automakers. Well-informed people are putting forth cogent arguments for and against.
Those who support giving aid to GM, Ford and Chrysler say the companies are too big to be allowed to fail. Three million jobs would be at stake. Bankruptcy by any one of them could turn the present escalating recession into an all-out depression.
Those who are opposed to the bail-outs point to Detroit’s long failure to embrace smaller cars and new technology, such as hybrid cars. They add this was the industry that fought legislation requiring better gas economy. They add that Big 3 management has proven incredibly inept in both good times and bad; a classic example of how the management class has failed both its workers and its customers.
There has been no shortage of broadsides levelled at Big 3 management. A man who’s studied GM for years, Fred Lazar of Toronto’s York University, says “GM management must go. They’re pretty dumb.”
Time Magazine has a delightful web site that offers merciless critiques of the automobile industry’s fifty worst cars of all times. The Big 3 are well represented. My choice entry is the 1958 Edsel, a mammonth of a car that was introduced amid a recession and at a time when consumers were rushing to buy the first U.S. compact car, the Rambler from American Motors.
1958 Edsel
The Edsel was a marketing disaster, costing Ford $350 million.
The Big 3 seem to be caught in an impossible situation. The only types of vehicles GM has been making money on are the much-reviled SUVs, plus trucks. But the $25 billion in profits they’ve earned on these models has been lost on others.
Ironically, the auto makers maneuvered the behemoths to market by twisting U.S. legislation that mandated improve fuel standards. Big 3 lobbyists managed to get Congress to exempt products like light trucks from the new rules. Presto, the SUVs like the four-tonne Ford Excursion were suddenly all but exempt from gas efficiency mandates. Light trucks, don’t you know?
When the top men of the Big 3 went to Washington last week, they had neither a plan to offer in return for the hand-outs they sought, nor had they given a thought to how their own behavior would sabotage their bids. As is famously known, they’d all flown to Washington on their corporate jets. Now they’re talking about car-pooling their return visit.
None of this might matter very much if governments give thought to what consumers are doing. One of the rules of prudent investment is not to throw good money after bad. I gave up on Detroit long ago. I’ve driven Audis for the past ten years, and have been delighted with these smart, comfortable and reliable vehicles.
Sadly, all good things come to an end. My six-year-old Audi has long since run past its warranty, and the repair bills have been mounting. So a month ago, I decided that rather than put more money into an aging car, it was time for a new vehicle. Thus, in November, I became one of a small, select and shrinking number of people. I went into a car dealership and shopped for a new car.
My choice was the Toyota Prius, the richly-appointed hybrid which delivers 71 miles to a Canadian gallon of gas (Imperial measure) and 48 miles to the smaller American gallon. The combination of electric battery and internal combustion engine makes the Prius a delight to drive, minimizes greenhouse gas emissions, and will save me a lot of money on gas.
2008 Toyota Prius
So I’v e voted on the Big 3 bailout with my pocketbook. As an unwilling consumer of Detroit products, does this means I have to send them my taxes instead?
