Undeserved credit, but what else is new?

The YG Network reported one week ago:

President Obama [Thursday] kicks off a three-day campaign-style tour, during which he’s expected to claim victory on the central issue of his presidency: the economy. If this type of fly-about sounds familiar, that’s because, as the Associated Press notes, it “has long been the Obama White House’s go-to strategy” during “tough stretches of his presidency.”

But if you think it’s just conservatives who are taking note of the president’s unearned “victory lap,” think again. As Karen Tumulty reports today in the Washington Post, “[a]t a moment when President Obama is seeking to convince Americans that the economy is finally back on track,” even some of his most liberal supporters — in this case left-wing Sen. Elizabeth Warren (D-Mass.) — are undermining his claims, publicly acknowledging that middle-class families are getting a raw deal.

As Warren put it today, “America’s middle class is in deep trouble,” a statement “the timing (of which) turned out to be awkward,” Tumulty writes, given President Obama’s high-profile attempts this week to convince Americans otherwise.

But while Warren and other Washington liberals stubbornly want to double down on the same big-government ideology that has failed working families under Obama, conservative reformers are offering a new way forward — one that addresses head-on the urgent challenges of stagnant earnings and skyrocketing price tags for top household priorities like healthcare and higher education.

Rather than trying desperately to convince working Americans that the economy is “back on track,” President Obama and his liberal allies should come to the table and work with the new, conservative-led Congress to implement this forward-looking vision for a thriving middle class.

The only thing that is better for the middle class right now is gas prices, the low level of which Obama hates and has done nothing to make happen. Obama and his environmentalist toadies favor high energy prices (remember “Electricity prices will necessarily skyrocket”?) in order to force us plebeians into his approved lifestyle choices.

So it takes some nerve for the Democratic National Committee to compile this list of Republican statements about the Government Motors bailout …

  • Rand Paul said he thought the country would “absolutely” be better off if car companies had been allowed to fail.

  • Marco Rubio stated “the jobs will be gone and we’ll still owe the money. Washington should just get out of the way,” while Ted Cruz attacked the rescue package.

  • Scott Walker said “we wasted a lot of money” on rescuing the auto industry and Mike Pence suggested “we’ve got to put the interest of taxpayers first and automotive workers second”.

  • Rick Perry not only criticized Republicans for voting in favor of the auto rescue, but he also suggested that it was a step “…in a very dangerous direction.”

  • Jeb Bush opposed the auto rescue and sided with Mitt Romney saying we should have let General Motors go bankrupt.

… because these are all correct statements. Carol Roth explains why:

Those that try to tout the bailouts’ success usually begin with a declaration along the lines of “If the government didn’t step in … then GM and Chrysler would have ‘gone bankrupt.'”

First, going into bankruptcy does not equate to going out of business. American Airlines went into bankruptcy and still kept planes flying in the sky, emerging Monday with even former shareholders getting some shares in the post-bankruptcy entity. So, going through a bankruptcy process would not mean that GM or Chrysler would have had to cease operations.

Second, a common refrain is that there were no private-equity or other firms that expressed interest in taking a stake in either company before the government had to step in. Well, that’s because the bankruptcy process wasn’t allowed to play out. The auto companies had out-of-whack balance sheets that included unreasonable liabilities, including union liabilities. No private-equity firm was going to let the UAW have any type of preferred status (although the government ultimately did, see below). However, by not going directly into a bankruptcy proceeding where these liabilities could be renegotiated, there was never a true process to solicit and evaluate interest from financial or strategic partners. That’s what the bankruptcy process was designed to do, but it never had the chance.

The reality is that GM and Chrysler had significantly valuable brands and other intellectual property, manufacturing equipment, a loyal customer base, a skilled workforce and more. There was substantial demand for their products. These were financial mismanagement bankruptcies stemming from noncompetitive labor costs and liabilities, not ones brought on by a lack of interest in the core businesses. To think that no financial or strategic buyer would ultimately have had an interest in these acquiring the assets of these companies is preposterous. Even if you could make that unreasonable and highly unlikely argument, consumer demand for automobiles would still be in place, which means that other manufacturers, like Ford, would have benefited and grown to absorb that demand, and of course a good portion of the related workforce and ecosystem.

To say that the government was the only white knight here ignores basic market principles. Does anyone really believe that the entire auto industry would have gone away or have any precedent for that happening?

Additionally, both GM and Chrysler did go bankrupt. Yes, the government took both companies through the process, using taxpayer money to sustain the companies while they moved the interests of the major union above that of the other creditors (including those that manage the retirement plans of many Americans) and only once this chicanery had been completed then went through the same process that the companies should have been in to begin with.

However, the outcome was pricey in multiple ways, even beyond the creditors losing preference to the UAW and its various interests.

On Chrysler, the taxpayers lost more than $1 billion and the company ended up in majority control of a non-US company (Fiat, an Italian company) and minority controlled by a trust for the benefit of retired auto workers. An IPO for Chrysler is planned for 2014, but the taxpayers still will record a loss and America also records the loss of ownership of an iconic brand.

On GM, the taxpayers lost more than $10 billion and now have no participation in future upside of that company.

Ultimately, we spent more than six figures per job to “save” them from a mythical end and end up with billions won’t be recouped.

What about the small businesses? Many argue that the bailout was about saving the small suppliers. But if this was about helping small business, there are many ways that they could have been helped directly. Perhaps the banks that were also bailed out by taxpayers could have been asked to extend credit to the small suppliers in the automotive ecosystem.

I have had enough with the bailouts. Our government shouldn’t be picking winners and losers and deciding what companies should receive taxpayer assistance and which shouldn’t. Moreover, they shouldn’t be prioritizing certain groups’ interests over others and shouldn’t be touting successes that aren’t real.

Let’s not pretend that this bailout is more than what it was: A mere wealth transfer that helped the unions at the expense of all taxpayers. When that type of cronyism happens, America loses.

That doesn’t include Yossi Gestetner‘s measures:

  • GM sold fewer vehicles in the U.S. in 2014 than in 2008.
  • GM had about 17.6% of the U.S. market in 2014, down from about 21.9% in 2008.
  • GM bailout had a net loss of $10.4 billion (bank bailouts a net gain of $24.3 billion).
  • GM’s 2013 profit was $3.8 billion; Ford, without a bailout, $7.2 billion.

The economy is now 8% larger than late 2007, right before the recession started, but total U.S. auto sales in 2014 were only 1.5% higher than 2007.

The only thing needed to be “saved” in late 2008 was GM (and Chrysler), whose finances had been run into the ground due to union contracts, not the weak economy. The auto industry at large had a rough ride just like everyone else, but the industry came out from the crisis depths without being bailed out. But auto sales growth is still lagging the rest of the economy, and GM is actually a drag on those numbers. Basically, the part of the industry that Obama did not “save” is actually doing better than the part he “saved.”

As for Chrysler … it was sold to an Italian company by the same president who complained in 2012 that Romney’s Bain is betting against America.

Gestetner’s numbers are low. This country lost at least $11.2 billion from the GM bailout. And for what? Thanks to our still crappy economy, millions of Americans will never be able to buy a new car. Ever.


The then-new New Chevrolet

In the fall of 1976, General Motors did something revolutionary for the day. They replaced their enormous (I speak from experience) B- and C-body cars …

… with smaller, more efficiently packaged cars:

The redesign worked so well (at least from the perspective of GM’s accountants) that it took 13 years for Chevrolet to redesign the Caprice.

This is a reasonable facsimile of my in-laws’ 1991 Caprice, which was a restyling, though not really redesign, of the 1977–90 Caprice. I liked it so much I wish, two decades later, that we had purchased it from them. (Even though the cars we had at the time were perfectly fine, unlike the previous, and quite possibly last, Chevrolet I owned, a 1988 Beretta, un pezzo di merda.) Like my 1975 Caprice, it was roomy, had adequate acceleration, handled well for a large car, and got decent fuel economy. (Which cannot be said about the 1975 Caprice, EPA-rated at 13 city and 18 highway mpg.)

Autos of Interest interviewed Dick Ruzzin, who as chief designer of Chevrolet designed the last Caprice:

All in all, the Caprice was a very successful car and used for many personal and commercial applications. Once I told a group of police that I was responsible for the design and they could not stop the adulation. Basically, they really enjoyed working with a car that was really neat looking, the best looking police car ever, which was their opinion. It looked fast and aggressive in police trim.

I still see some Caprices and in spite of all the cultural changes in design, over twenty five years later, they are still intriguing and stand up very well. The flush side glass and futuristic headlights for the time helped push its character into the future.

The design effort was a fun time; we had a lot of great people working in the studio and did a lot of work. The Caprice followed the design of the Cavalier, Celebrity and Eurosport, and Lumina Sedan and APV, as well as a small car program to replace the Chevette that was cancelled after it was released. We also had design responsibility for all three Japanese small cars sold by Chevrolet from Isuzu, Suzuki and Toyota, as well as the Chevette. That meant a lot of responsibility and effort on everyone’s part. The quality of the people shows through in the quality and reach that our designs had as we see them now, so many years later. …

We decided to challenge the Chevrolet engineers. Since the car was done over an existing platform our Studio Engineer, Dick Olsze, suggested a goal for them: reduce the size of all the structural criteria by 10 percent—not the strength but the size—giving us an advantage over the old car. In some areas they were able to achieve that. The biggest challenge was the small block V8 distributor that sat right under the base of the windshield. It had to be redesigned with a two-piece distributor shaft.

When the model was blocked in and in color we took it outside for the first time to participate in a large show. It included a number of cars from other studios so that our management could get a good idea of what was being done and to also see strengths and weaknesses of each program. The Caprice looked like a moon rocket compared to the others.

It was the first time in many years that a car was being done that was not being downsized. Everyone loved it; it was the newest design in the show. The further we went the more the design was cemented into place because we added a lot of detail with sophisticated surfaces that made it look like we had worked on it a lot longer. When Chevrolet saw it they loved it.

The engineer in charge of the project was so enthusiastic that Chevrolet built a running car to demonstrate the concept to the GM Board of Directors. The car was all released for production, although we were still making small changes when he drove it over one Saturday morning. We all took it for a ride and it looked incredible; it was our favorite color, dark red metallic like our fiberglass model, with a light tan interior. It was a real hit.

About a year later, I was in Cadillac Studio and we then did the Cadillac version, called the Fleetwood. I just saw a maroon one today in excellent condition. We also did the Presidential Limousine. Two years later I was in Chicago on a beautiful sunny day walking out of Bloomingdales and there parked in front of the store was the regular limousine that we also designed. Those cars were all done on the side while we were really pushing hard on the Seville and Eldorado.

Last spring I was in Detroit and there parked at a gas station were two black Fleetwoods in absolutely pristine condition. They looked great. The design for those cars, the Caprice and the Fleetwoods were done a long time ago, about thirty years.

They did look terrific.

The thing about the Caprice was that, because it was over a very old platform, the design expectations were low. The studio that had responsibility for the Caprice was Chevrolet #1. It was a shock to me when we were given the assignment but we were really doing a lot of great work at the time and were very well respected by Chevrolet Engineering for how we did things, how we helped them do their job. We had sold the Celebrity Eurosport program to Chevrolet and that was something that they really admired, that is, how we accomplished it.

The Caprice profile was like no car ever done at design to that point because it broke fifty years of tradition. The car was taller than it had to be. We did that to have a smooth flowing line from the bottom of the windshield, over the passengers and to the bottom of the back-lite. Our VP, Irv Rybicki, asked me about that; our internal engineers had found out and told him. I explained why we did it and he accepted it without a problem. …

Autos of Interest: What was the target clientele for the new Caprice?

Ruzzin: Caprice customers. They had to see it as their car, it had to have some touches that identified it as the new Caprice. We could not make it smaller due to the carry-over platform but we did everything possible to make it “look” smaller. Interior space was huge.

Autos of Interest: Did other GM divisions (or law enforcement) have input relative to their needs?

Ruzzin: The car originally was going to be a Chevrolet only at 300,000 cars a year. When Oldsmobile, Buick and Cadillac saw it they lobbied to get it also which resulted in a lot more production, some of it hard to sell.

There was no law enforcement involvement but I do know that when the car went out of production, Chevrolet had 90,000 police car orders in hand for the future; they wanted to continue building them in Mexico and the UAW stopped it. They did make great looking police cars, aggressive and dynamic. …

Autos of Interest: Was the wagon a definite model from the start and why did it debut later?

Ruzzin: It was a model to be executed from the beginning but the geometry of the sedan design had to be developed, first, before you could do the wagon. The plan view of the doors had to be capable of extension to the rear to make a wagon. It also had to enclose the carryover rear tailgate hinges. Also, for Chevrolet, as the sedan moved along they could then shift manpower to the wagon.

Autos of Interest: Was a coupe considered, or toyed with? Even in concept?

Ruzzin: No coupe was ever considered. Coupes were on a sales down-slide at that time.

There were a few changes in the last five years of the Caprice, most notably the rear wheelwells …

… due in large part to the creation of the 1994–96 Impala SS:

To me, the 1991–93 Caprice looks better. The rear wheelwells emulate fender skirts, which Caprices had, either as options or standard, until the 1977 downsizing. That design, however, resulted in a narrow rear wheel track on sedans, though apparently not on wagons, which had a different rear suspension.

On the other hand, the 1994–96 Caprice had the Corvette’s LT1 350 V-8, which developed 260 horsepower. The Buick Roadmaster sedan …

… and wagon …

… and the Cadillac Fleetwood of those three years had the same V-8.

The observant will notice one major difference between the Roadmaster Estate and the Caprice Estate: the second-row skylight, which was meant to remind buyers of the former Oldsmobile Vista Cruiser:

The 1991–93 Olds Custom Cruiser had one too …

… which is a bit ironic since the original Custom Cruiser wagon, like all the big GM wagons, didn’t have a vista roof.

As I’ve written here before, big wagons died because of EPA fuel economy regulations and resulting buyer interest in sport utility vehicles and minivans instead of station wagons. Which is too bad, because I at least would like to have one of these.


The year on wheels

If you have any interest in cars, or one of the biggest industries in the U.S., you have to read Peter De Lorenzo’s Autoextremist blog.

A writer like De Lorenzo is important in any field worth studying because it’s important to read someone who’s not impressed by anyone. Cynics are not popular, but they’re at least as often right as they are wrong. And as you read De Lorenzo‘s 2014-in-the-automotive industry tome, the impression you get is that De Lorenzo is impressed by no one:

Welcome to this “thing” called the automobile business. Like a Dead Air Circus twisting in the wind, the automobile business writ large here moves in fits and starts in a two steps forward, three back pirouette of ignominy, one that provides a constant thrum of mediocrity, a sinister Motor City soundtrack of “dark noise” if you will that is always there, looming in the background.

Is it all tedium? Thankfully, no, not by a long shot.

We are enjoying the finest cars and trucks in automotive history, and at every price point too. We’re also bathing in a golden era of performance, one that few thought would sustain itself as we march ever forward to a No Fun culture that pillories the automobile at every turn.

The looming societal storm clouds can’t dampen the inherent goodness and level of technology found in the average cars of today. It’s simply staggering to contemplate the advanced technology, fuel efficiency and general level of excellence available in even the most mainstream of automobiles available. If you had predicted the level of technology and efficiency that would be available in a typical Ford Fusion, Chevrolet Impala or Toyota Camry even as recently as ten years ago most people would have scoffed at the notion.

There are no bad cars anymore because the price of entry in order to compete in this, the most competitive market in automotive history, goes up with each passing quarter. Combine that with the ever-escalating regulatory demands for more safety and more efficiency, and you have a never-ending upward spiral demanding even more overall excellence that consumes this industry’s every waking hour. And all of that is wonderful and a reason to be optimistic about this business.

But, well, there’s always a “but” when it comes to the car business.

Once again we were blessed or haunted (depending on how you look at it) by an assortment of crackpots, a few actual visionaries, hordes of recalcitrant twerps, legions of spineless weasels, the obligatory egomaniacal dictators (with special emphasis on the first syllable), an unfortunately high quotient of unmitigated hacks, and of course the True Believers, because if it weren’t for their diligence, this business would implode on itself all over again.

This was the Year of the Recall, the Year of Sergio, the Year of Horsepower, the Year of Mary and for a lot of reasons, the Year from Hell.

How can that be, you say? Everyone’s making money hand over fist as the national frenzy for crossovers, SUVs and pickup trucks seems to know no bounds. It’s all good, right? Yes, until it isn’t that is.

Don’t let those supercharged sales numbers go to your heads, because in typical Detroit fashion what goes up like a rocket comes down with a resounding thud. It always has and it always will. And just as the executives at the car companies here in the Motor City begin to believe their press clippings and start to think that maybe, just maybe this blissful state of soaring sales is going to stay hot forever, well, things are bound to get weird.

Though I’ve often written about the good things going on in this business, the constant misdeeds and missteps that seem to dog this industry and its players at a relentless cadence consume most of my time. That there are three dumb moves for every two smart ones in this business is a given and has been proven out over time. And to the industry honchos who are absolutely convinced that it won’t happen – or is not happening under their watch – I’ve got news: You can’t really control it; you can only hope to contain it.

De Lorenzo writes about Chrysler, now owned by Fiat …

The name is Sloan. Alfredo Sloan. The all-knowing and all-powerful leader of the Fiat Chrysler enterprise has been anointed The Altruistic Savior of all he surveys by the bootlicking hordes in “the media,” portrayed as the man who pulled the doddering old Chrysler out of the depths of despair while giving its huddling, downtrodden masses who were facing a certain death sentence a reason to live. And it’s all unmitigated bullshit too. 

Marchionne is a shrewd, make that brilliant deal maker who happened to be in the right place at the right time and who was able to abscond with the car company formerly known as Chrysler lock, stock and barrel for the staggeringly paltry sum of $6 billion, all in. And in one fell swoop he gave the idle aristocracy who inherited the Fiat “empire” – and had almost run it into the ground once and for all – another lease on life. For that he has been granted career canonization the likes of which has never been seen before in this business, sort of an Alfredo Sloan for our times.

But then again there’s another side to Sergio that isn’t sexy, glamorous or all knowing, which is why it continuously goes unreported.

Marchionne’s brilliance when it comes to putting together big picture deals is unquestioned. Let’s face it, anyone who can walk away with the Jeep brand for the above-mentioned sum and get the rest of Chrysler in the bargain is a frickin’ genius.

But The Other Sergio is a plodding, micro-managing maniac who believes that Fiat Chrysler employees – no matter what the level – should be happy that they’re allowed to be in his presence. And for that, and the occasional opportunity to be bathed in the warmth from the glow as The Great One passes them in the hallway, they get a shockingly head-in-sand management approach – a time-tested legacy of the Fiat “empire” that’s unwanted and unwarranted – yet shoved down the throats of the Auburn Hills faithful with astonishing regularity.

The ingrained backwardness with which the Italians approach everything actually has the denizens in Auburn Hills reeling from having to dumb down the way they do things to appease their Italian handlers on a daily basis. Sergio’s espresso-swilling minions regularly ignore hard-earned and hard-won lessons that have stood the test of time in this business in favor of doing things “their” way, even if it jeopardizes the company’s competitive standing in the market or it costs the company millions in do-overs and start overs.

The arrogance of the Italian overlords running Chrysler now rivals the arrogance displayed by the German overlords back when Daimler had its crack at the keys to the Jeep-Truck kingdom. Combine that with their openly hostile attitude, which states that every supplier who brings an idea or a product to them can, as they often say, “cut your number in half and then we’ll talk.” It’s a wonderful way to build trust in the supplier community and an even better way to ensure that FCA misses out on leading-edge technology and thinking across all disciplines.

And Sergio’s latest management brainstorm is to jettison anyone over 50 (no, you won’t read this anywhere else) because they’ve become liabilities and are not forward thinking enough. Top-notch, seasoned executives are being shown the door in favor of young, inexperienced replacements with the inevitable result: The young hires are being blown out and replaced by similarly young and inexperienced people and guess why? They can’t do the work because they don’t have enough experience. It’s a revolving door of mediocrity that just keeps doubling up on itself. Meanwhile, the senior-level managers, sensing the tide, are gathering in droves at the door clamoring for a way out.


… Government — I mean General — Motors …

Pardon me for thinking that we’d heard the last from Dan Akerson, that loathsome and now legendary carpetbagging tool who held the reins of GM in his hands for three-and-one-half excruciatingly painful years. Forgive me for thinking that the Unctuous Prick would take his leave and quietly retreat to the friendly confines of Washington, D.C., so he could regale his cronies how he survived his near-charitable stint in the hinterlands, trying to impart his wisdom to the poor unfortunates who toiled away in such a pathetically backward business that it’s a wonder it functioned at all before he got there. And please cut me some slack, because I thought that after such an embarrassing run at the top of what was once America’s industrial showpiece, where he was simply reviled and despised at every level of the corporation, that Akerson would keep his mouth shut, especially in the midst of the biggest crisis in the company’s history (other than the bankruptcy, of course).

No such luck, however.

Safely ensconced back hard by the Potomac, the former CEO gets his chance to obfuscate, deny and continue his game of self-entitled outrage at GM’s so-called “culture” laced with his usual cloying air of superiority – his M.O. for three-and-a-half tedious and tiresome years while at the helm of GM – in an interview by David Shephardson in Monday’s The Detroit News. Why Shephardson thought it would be a good thing to let Akerson pontificate once more is questionable but in the end he did us all a great service, because the depth and breadth of Akerson’s gift of self-delusion is there for all to see. I view the interview now as yet another important entry into The Historical Document of Bullshit marking Akerson’s Reign of Terror at General Motors.

Playing his Sergeant Schultzian “I know nothing” defense to perfection, Akerson blamed GM’s culture and didn’t own up to anything, except that he was a genius for promoting Mary Barra. In one particularly telling passage, Akerson railed at Internet chatter calling the suggestion that GM could soften criticism of its mishandling of the recall by promoting the first woman to lead an automaker ridiculous, adding, “fools can say anything… We have four women on the board. You’d have to be so cynical. You’d have to be a terrible person to even (think it).” Akerson called the suggestions “hurtful.”

Well, boo-fricking-hoo, Dan. Do you really want to know what’s hurtful? Having to listen to you bob and weave and pretend you knew nothing. Having to sit there and listen to the relentless stream of unmitigated bullshit that comes out of your mouth, with you operating under the assumption that if you’re saying it, we must believe it to be true, because after all, you’re the great Dan Akerson, and we’re not.

Instead, it’s an outrageous insult to everyone’s intelligence who ever played this game (except to those you favored and promoted, of course).

That’s right, Dan, you, the Unctuous Prick who openly loathed every last inch of this business to its core, and who regularly regaled your buddies on how just backward, unseemly and pathetic the auto business really was.

You, the guy who insulted the hard-working people of GM on a regular basis and in such condescending fashion that the common refrain I heard from seasoned, talented individuals throughout the corporation was that you were an abject embarrassment that they wished would just go away.

You, who had so little respect for the history of this business or the people who came before you that you dismissed it all with a wave of the hand as being inconsequential and irrelevant, that you and your Telecommies had more smarts in your fingernails than anyone in this town or in this business would ever accumulate.

You, who professed your “love” for this city while not once living here, instead parachuting in to the Westin Book Cadillac Hotel when you had to be here while having your Chief PR Bagman, Selim Bingol (aka Unctuous Prick Jr.), try to paste together the story that you were a “car guy” who was just trying to do what was best for the company, because clearly the “little people” laboring there didn’t have a clue.

You, who held such little regard for the complexities of the business that you once bragged to an underling, “You could run product development, hell, I could run product – it’s not that hard.”

You, who followed that up by promoting Bob Ferguson – GM’s Chief lobbyist, of all things – to run the Cadillac Division globally, even though he had not one shred of perspective or qualification to do so, saying in not so subtle fashion that he was a smart guy and he wasn’t one of “them” – meaning one of the poor unfortunates who make up the backbone of this business who were toiling away at the company while you preened and pranced before them spewing insults in their direction.

How did all that work out for you, Dan?

The High-Octane Truth of the matter is that the company survived in spite of you. Those people whom you insulted and treated so condescendingly on a daily basis? Those True Believers are solely responsible for the product hits that GM has in the market today.

It certainly wasn’t you, Dan, not by a long shot. Let’s not forget that you were plucked from boardroom obscurity by the most incompetent board in corporate America because you had the temerity to raise your hand in a board meeting when the subject of running the company came up, and you deluded yourself somehow into thinking that happenstance was a mandate of some sort that simply didn’t exist.

That “Accidental Tourist of a CEO” moniker? You earned it and everyone knew it. You’re just lucky that GM’s board was so singularly incompetent, because if a boardroom coup could have been properly mounted, you would have been toast and you know it. You had only a handful of supporters and even fewer defenders. The rest? You misconstrued those smiles as meaning people actually liked you. No, Dan, they loathed you, and they did what they had to do to get by, which meant marking their desk calendars daily with big a red “X” praying that this would be the day that you would finally leave.

You were a walking-talking embarrassment from the get-go, simply a ridiculous spectacle fueled by a maniacal, runaway ego that knows no bounds, a Captain Queeg for a new age, couching everything in juvenile, bombastic, militaristic banter that had Navy people writing me embarrassed that you were dragging your naval background into the proceedings.

You are the quintessential definition of a carpetbagger. You had no affinity for the business or the people who worked in it whatsoever. You dismissed this industry as a backwater embarrassment and you were just biding your time until you could find something better, hoping there was a huge payday at the end. Instead, you made your escape back to Private Equity before the shit hit the fan. Nicely done.

“Terrible person”? That moniker happens to fits you to a “T”, Akerson.

Now, please do us all a favor and shut up. (“THE UNCTUOUS PRICK RETURNS FOR ONE LAST HURRAH.” – July 30, 2014)


… Ford Motor Co. …

When you live around here, it’s not uncommon to hear people talk about “working at Ford’s.” You’ll never hear that when people discuss working at the other car companies, and that is because “working at Ford’s” means working directly or indirectly for the Ford family, who still retain control and very much a vibrant interest in the family business, which, lest we forget, is one of the most important industrial legacies in America and part of the very fabric of this nation.

In the global automobile business as it is defined today the Ford Motor Company remains a unique operation, a family-owned and run business that stands out among the faceless corporate entities that make up the rest. Yes, there are family legacies at some of the other car companies around the world, but Ford is different and will always be different.

And that is because the Ford family cares. They care about the company’s role in providing for so many families in the community, they care about the family’s historical legacy, and they care that the Ford Motor Company continues to deliver a kaleidoscope of effective transportation choices for people all around the world.

And the fact that the family does care has endeared the Ford Motor Company to people around here in a way that the other car companies in town never will.

The members of the Ford family work in and around the company in various capacities, too, with William Clay Ford Jr., executive chairman, the most visible. It is simply extraordinary that the family has remained engaged and involved in the company for 110 years, and that’s due to the fact that they have never slacked off or “phoned it in” but instead have kept the flame and the family legacy alive for generations to come.

The passing of William Clay Ford does mark the end of an era, as he was the last living connection to the very beginnings of the automobile business.

But it’s also a reaffirmation of a most remarkable legacy, one that William Clay Ford Jr. and the other members of the Ford family will now proudly carry on. (“A MOST REMARKABLE LEGACY.” – March 10, 2014)

… the apparently crazy world of automotive PR:

PR brawlers, really? It may be surprising to some who are new to the whole Public Relations game, but the inner workings of big-league PR are usually in direct contrast to the rigidly controlled, politically correct images that PR handlers so carefully craft for their CEO charges.

Behind the scenes it’s a back-alley brawl stopping just short – but not always, I might add – from fisticuffs. Depending on the day, PR handlers in the car biz fight with journalists, editors, TV news show producers, other PR handlers from rival car companies, professional company irritants, pitchfork-wielding anti-car safety advocates and environmental groups, and an assortment of “vermin” – as they see it – who come out of the woodwork to threaten their boss, or the company, or both.

The modern PR handler’s array of weaponry includes scathing email diatribes and verbal threats, political maneuvers and story plants carried out through mainstream and social media platforms, and good old-fashioned finger jabs to the chest delivered in person, just to name a few. (“SHARP TONGUES AND SHARPER ELBOWS, THE ROUGH-AND-TUMBLE WORLD OF MODERN PR LIVE AND IN COLOR.” – October 22, 2014)

… and the industry in general:

There aren’t? You gotta be frickin’ kiddin’ me! I caught a lot of car companies chasing their tails at the New York Auto Show, ignoring the two most enduring tenets of the business, which are:1. It’s about The Product. It always has been and it always will be too.

2. Design is still the Ultimate Initial Product Differentiator. If you don’t have it, you can’t hide it. And if, as a manufacturer, you go all vanilla hoping to offend the fewest people, you’ll probably end up attracting the fewest people as well.

And if there’s a third, it’s this: There are no Magic Beans to be found in this business.

Instead it’s about designing, engineering and building fundamental product goodness and having the focused consistency not to waver from that mission.

It’s about creating products that are emotionally compelling to look at, fun to drive and rewarding to own.

And it’s about adhering to the core competencies of the brand. In other words, whatever you’re good at and whatever your reputation is based upon, you better deliver on that promise. Anything less and you will get lost in the shuffle, or just get lost, period.And of course it’s about not veering into niches or segments that you don’t belong in, no matter how enticing they are.



If you see a fork in the road …

Kevin Binversie:

You would think state liberals would be cheering the state Department of Transportation’s 2015-17 budget proposal and not trying to score cheap political points. After all, the budget largely reflects the success of the liberal environmental agenda. …

For those that missed the headlines, on Friday DOT Sec. Mark Gottlieb dropped a staggering request for the next state budget. Totalling $751 million, the proposal radically restructured the state’s existing gas taxes on unleaded and diesel gasoline, raises vehicle registration fees on electric and hybrid vehicles and raises fees on new vehicles sales. All of which are designed to acknowledge a reality facing all 50 states and the federal government – cars and trucks are getting more mileage, and as such, gas tax revenue is shrinking.

For years, the state’s largest source of highway funding has been the gas tax. Since it is a “per use” tax, only those buying gasoline by the gallon pay it. As cars become more fuel efficient, they need less and less gasoline and thus the tax is paid less and less. If you add in new hybrid or even electric cars, the tax is paid even more infrequently or not at all.

So as cars on the roads become more fuel efficient and less revenue comes in through traditional sources, governments are scrambling to find ways to pay for roads, bridges and other infrastructure projects. Most transportation experts will tell you this tends to go into three different routes.

1.) More and more toll roads.

Federal law forbids states to establish toll roads on existing roads. It does however, allow them to be established on either newly built roads or when existing roads go under reconstruction or increase their capacity. Given how anathema toll roads are to the average Wisconsinite, it would both take too long and be too costly to establish a viable toll road system on Wisconsin’s high use roads in Milwaukee, Madison, Waukesha, Green Bay and other locales.

2.) Mileage Use Taxes.

Imagine if you will, a state where every vehicle has a GPS tracker installed. This tracker measures not just how much you’ve driven, but also gives to government agencies detailed information in real time such as where you’ve been, how fast you got there, and any detours you took while along the way. You’re taxed by the mile and sent a monthly bill.

Could police use this data to give driver’s speeding tickets and other traffic violations? Likely. Is this all a series of extreme violations of one’s civil liberties? Probably, but many don’t want to wait for the U.S. Supreme Court to sort it out.

3.) Reconfiguring Traditional Gas Taxes / Increased Registration Fees

The old standby and the route Gottlieb seems to be going.

Given the 2005 fight in which Wisconsin conservatives successfully ended Wisconsin’s practice of gas tax indexing to inflation, one would understand legislative hesitation to go anywhere near DOT’s proposal. After last week’s election, the last thing a newly-minted legislative Republican majority wants to hang on the state is a huge gas tax increase and new user fees related to numerous kinds of vehicles.

Critics of the DOT plan will no doubt mention how Gov. Walker never proposed any of this during the campaign. Then again, Mary Burke didn’t come with any specifics herself.

While the solution is far from perfect, Gottlieb should be applauded for getting the conversation started. Because the past ways; where fund raids and indebting the next two generations with bonds so the highways of today could be paved were all too common, won’t cut it anymore.

When it comes to deciding how best to fund roads, the legislature will either have to get with the times and devise a system that encompasses new technologies into old revenue streams or learn to go with less when it comes to road-building.

The Milwaukee Journal Sentinel reports:

A $751 million boost in taxes and fees isn’t the only way Gov. Scott Walker’s transportation chief wants to keep major road projects on schedule.

Over two years, Transportation Secretary Mark Gottlieb also wants to borrow more than $805 million, study the feasibility of tolling and use $574 million in funds that typically go toward schools and health care.

Under another part of Gottlieb’s plan, the state Department of Transportation would gather odometer readings when drivers register their vehicles each year — a move that would help it review whether the state should create a new fee based on how many miles people drive.

Gottlieb’s proposal is in its infancy. On Tuesday, Walker told The Associated Press he would make significant changes to it before submitting a transportation plan to the Legislature as part of the overall state budget early next year.

He declined to rule out raising the gas tax, saying he was “not making absolutes on anything right now.”

Once Walker gives his plan to lawmakers, they will spend months modifying it before returning it to Walker for his final approval. The Legislature is controlled by Walker’s fellow Republicans.

Legislators from both parties have been muted in their responses to Gottlieb’s plan. They have said they see a need for more money, but also have expressed reservations about increasing taxes and fees or relying too much on borrowing.

Bonding more than $800 million for road projects is “not sustainable,” said Sen. Alberta Darling (R-River Hills), co-chairwoman of the budget-writing Joint Finance Committee.

She said she would listen to her constituents on what to do when it comes to funding transportation.

“I’m all ears,” she said. “I honestly hear about two different pictures of Wisconsin. Some people say we have enough roads already. Others point to what bad shape the Zoo Interchange is in.

“We have a problem. People agree we have a problem, but when you say, ‘How about these solutions,’ they say, ‘None of the above.'”

Brett Healy, president of the conservative MacIver Institute, said Gottlieb would have a tough time persuading people to sign onto his plan.

“Everywhere drivers look, all they see is road construction and orange cones but now the department says they need more transportation funding,” he said by email. “Adequate transportation funding is critical to economic growth but there must be taxpayer balance.

“Higher transportation taxes and fees in this economy and this political environment will be difficult to justify.”

One thing not mentioned is a closer look at what WisDOT wants to fund — for instance, mass transit, which is not used by most Wisconsinites, but you’re paying for it. Gas taxes also pay for such non-motorized-transportation as bike paths. So the first thing the Legislature needs to do is to stop using the transportation fund on things that don’t benefit drivers, including drivers of tractor-trailers. Mass transit is directly contrary to people’s freedom to go where they want when they want.

The gas tax in theory is a proper tax because it’s paid by drivers in proportion to their use of roads. If you drive more, you buy more gas, and therefore you pay more gas taxes. The problem is that as vehicles become more efficient, their drivers purchase less gas. (The Obama Recovery in Name Only has also reduced driving, which also has reduced gas tax revenue.)

User fees are in theory better than taxes because non-users don’t pay them. On the other hand, making car ownership more expensive is not beneficial to users of roads. (This demonstrates, among other things, that Republicans in Madison really haven’t done nearly enough to reduce government in other areas to be able to afford higher spending in transportation. As you know, state and local government is twice the size it would be had it been had government been limited to growth in inflation and population growth the past three decades.)

The feds have a pernicious influence as well. Federal mandates to spend money on mass transit and other things that don’t benefit drivers need to be repealed by Congress. So do prevailing-wage requirements, which make construction projects, including road projects, considerably more expensive than they should be in a supposedly free-market economy.

There have been proposals for several years to devote tax revenues generated by transportation for transportation, particularly sales tax proceeds from vehicle purchases. That makes sense, particularly in keeping with voters’ wise choice to keep legislators’ hands off transportation funds for political convenience (see Doyle, James).

The toll study, however, is a waste of time, because there is no political support for toll roads, even if toll roads today aren’t like the Illinois Tollway of the 20th century. You want more recalls? Create toll roads, and you will have them.

Making driving more expensive by increasing taxes has a direct effect on taxpayers’ wallets, as we all discovered during the $4-per-gallon era of gas prices earlier this decade. Whether people drive less or not, gas prices affect the price of everything that is transported by vehicle, so if you increase gas taxes, you increase the price of things people buy at stores, particularly food.

Rollin’ down the highway

This week apparently includes two anniversaries, according to the American Association of State Highway and Transportation Officials:

state road signs

In 1924, AASHO recommended the adoption of uniform sign practices based to a large extent upon the action of the Mississippi Valley Conference, but distinguished colors for “luminous signs,” such as yellow for caution, red for “stop,” and green for safety. It was, however, some time before the “reflectorized” sign came into extensive usage, awaiting the development of economic and effective materials.

And, then…

In 1957, the Chief Administrative Officers of the several Member Departments were meeting in LaSalle, Illinois, on August 14, to attend a policy meeting dealing with the AASHO Road Test Project (more about that in a later post!) The occasion was used for these Administrators to view suggested route marker designs on a section of country road near the Road Test Project. They were viewed under night and day-time conditions, and after some discussion it was decided to adopt a marker that combined certain features of designs submitted by the States of Texas and Missouri. The Committee on Administration thereupon by unanimous vote adopted the official marker which is used on the routes of the National System of Interstate and Defense Highways to this day.

Road signs have been another of my odd interests over time. (Which means I must have an interest in design, though there’s nothing I really can design other than meals.) Starting with a trip to Detroit (the Ford plant where the Mustang II was being made, the Kellogg’s cereal plant in Battle Creek — which you can’t tour anymore — and Greenfield Village, a must-see for gearheads), I would draw road signs as Dad drove the Caprice along whatever Interstate highway we were on.

The graphic is cool because it depicts the original design of state highway signs in all their variety. Wisconsin, as you know, was the first state to number its state highways (though county highways have letters, as you also know), though the first design wasn’t the triangle behind a square it was …

… a triangle. Wh0ever decided on that made a distinctive choice, though not a very usable design, which is how we got the square-over-triangle sign, which is at least original compared with circles (Iowa) or squares (other states).

The graphic shows that many states have, or had, state highway signs that either followed, or at least included, their state’s shape. (Including Minnesota.) I’ve always preferred that, though Wisconsin’s shape doesn’t exactly lend itself to such a design, except possibly in outline. (And why the Division of Motor Vehicles doesn’t use a Wisconsin shape in place of the dash on non-personalized license plates is something I don’t understand either.)

Speaking of Interstate highways …

Last week was the 56th anniversary of the opening of the first segment of Wisconsin’s first Interstate highway, I–94 between what now is Wisconsin 164/Waukesha County Y/Waukesha County JJ and Waukesha County SS.

Seven years later, on Oct. 27, 1965, Gov. Warren Knowles celebrated my impending five-month birthday by opening the last segment of I–94 between Madison and Milwaukee. In the pre-Interstate days, getting from Madison to Milwaukee required going on either Wisconsin 30 (pretty much the current I–94 route), or U.S. 18, which meant going through Cambridge, Jefferson, Oconomowoc and Waukesha to get to Milwaukee.

One year after the first part of I–94 opened, the first part of Interstate 90 opened, from the Illinois Tollway just south of the Wisconsin–Illinois state line to Janesville. The Interstate east of Madison (I–90 from U.S. 12/18 to I–94, and I–90/94 northward to the Dells and, eventually, Tomah) opened in 1961.

From the 1940s, when what became the Interstate Highway System began to be mapped out, I–94 was always intended to be a Twin Cities-to-Eau Claire-to-Madison-to-Milwaukee-to-Chicago route. I–90 was intended to be a Madison-to-Beloit route, but west from Madison things changed.

Notice that the freeway west from Milwaukee goes straight west. What became I–90 was originally supposed to follow U.S. 18’s approximate route into Iowa. Instead …


… I–90 went north to link to La Crosse and Rochester, Minn., saving money as well because of using the I–94 routing to Tomah. The original I–90 routing, or a proposal to have I–90 follow U.S. 14 from La Crosse to Madison via what now is the South Beltline, could have changed western and southwestern Wisconsin development substantially.

Speaking of the Beltline, according to the state Department of Transportation, its history dates back to first construction in 1949 of the “South Beltline” and “East Beltline,” which is U.S. 51, more commonly known as Stoughton Road. I had no idea the Beltline was that old. Obviously it was designed in a day before Madison took an official position against the automobile.

The red shows the Beltline and Madison in 1956. According to maps I’ve seen, by 1956 the Beltline was four lanes from Park Street (in the middle-lower right) west to about the curve west of Verona Road, where it didn’t get upgraded to four lanes until the late 1960s. (I always remember the West Beltline, which is technically from Park Street westward, as four lanes, though it was two lanes north of Mineral Point Road until the mid-2000s.

The Beltline comes to mind because a massive reconstruction project is under way at the Beltline–Verona Road interchange. The portion of U.S. 151 from east of Verona to the Beltline slows traffic down to stoplights. It is a huge bottleneck, and as usual the state is about 30 years behind upgrading that portion. Worse, in this case, because there is no good away around Verona Road, the project is taking place while traffic goes through it, both delaying construction and making the bottleneck even worse.


Change ≠ Progress, Future Corvette Edition

I got my new Car & Driver magazine in the mail earlier this week. And it reported on something I managed to miss from one month ago, passed on by Jalopnik:

Car & Driver’s depiction (actually done by a 15-year-old) of the supposed next Corvette.

GM’s head of global product development, Mark Reuss, confirms that the company is working on the next Corvette. Our sources elaborate on this salient piece of information, telling us that, after 61 years of evolution, the C8 will be revolutionary.

The new Corvette will be the mid-engined American Dream Machine that Chevy couldn’t, until now, muster the courage to build. In truth, the factory is still not prepared to detail what’s coming, which is why you’re looking at the 2017 model year through our freshly waxed crystal ball.

THE PLAN: The C8 flagship, the Zora ZR1, will debut the new mid-engine architecture. Launching as a 2017 model, it will define the top of the Corvette hierarchy just as its precursors did in 1990-1995 C4 generation and 2009-2013 C6 model years. As before, the ZR1 will be low volume, roughly 1500 units per annum, and high priced. We figure around $150,000.

Before I go on: Regular readers know I have a thing about the Corvette, though I have driven few and owned none. (I work in journalism, have kids, and to date have received exactly $0 from my supposed Vast Right Wing Conspiracy benefactors. And no one has gotten me one for my birthday or Father’s Day. And I have yet to see in the flesh the yellow convertible recently purchased by a member of my family, with the correct transmission, that really needs to come up here.)

So if you’ve read this blog, you know of my skepticism of mid-engine Corvettes (or more accurately Corvettes with engines behind the driver) such as …


Astro II



The Pininfarina-designed prototype powered by a two-rotor rotary engine.

The four-rotor prototype, which with a 400 V-8 became the AeroVette prototype,


Technically the Corvette has been a mid-engine — that is, the engine is mounted between the front and rear axles — since the C4 debuted in 1983. This obviously refers to a future Corvette with an engine in front of the back wheels, instead of behind the front wheels.

I truly believe that every car magazine publisher has a note in his desk that reads something like: “In case single-copy sales are lagging, do a NEW MID-ENGINE CORVETTE! story.” Car & Driver, Road & Track, Motor Trend, Automobile and the others have resorted to what could be called “Corvette porn” — predictions that are fun to read and heighten anticipation, though they don’t actually happen — for decades. (This was particularly the case during the 15-year run of the C3 Corvette, which was due to be replaced by a new mid-engine Corvette any day now, or then.) Jalopnik calls the rear/mid-engine Corvette as “the automobile magazine’s white whale; an elusive beast that always seems so close and yet, always, just of reach.”

One of the two reasons I remain skeptical about a mid-engine Corvette is that GM already sells every front-engine Corvette it makes today. The side view of every mid-engine Corvette design except possibly the XP-882 and AeroVette shows a car with more back than front, which goes against every previous Corvette design. And there are enough people not enamored with the C7’s design; for some reason every alternative-looking version looks better than the actual animal.

The other is that I am extremely skeptical that GM could pull it off successfully. Fans of the idea of a mid-engine Corvette exaggerate, I think, GM’s ability to design a mid-engine car that works in today’s world. For instance, C&D reports that this C8 is likely to have all of 5 cubic feet of space in the front end and the rear end. C&D writes that “This will surely disappoint golfers who drive their C7s to the links with more than one set of clubs in their 10- to 15-cubic-foot cargo holds. The new Zora ZR1 will be for those who enjoy long drives without using clubs.”

Yeah, well, GM already has too many stories to tell of ignoring customers’ demands at GM’s own peril. Why not eliminate the sound system while you’re at it, and make drivers listen to nothing but the engine or their passenger? That’s the purist driving experience, after all.

You would think at some point car owners would get tired of being GM’s guinea pigs for technology not quite sorted out (the Vega’s melting aluminum engine, the Citation, Computer Command Control, Cross Fire Injection) when the car leaves the dealership. I can see maybe one-tenth of Chevy dealers being able to service a car with the engine in the wrong end. I can see service costs skyrocket, which would be good for GM and its Chevy dealers, but not so much for the owner.

C&D also reports that the C8 will not have a manual transmission, and won’t have a transmission designed by GM either, instead from the outside:

Our snooping suggests that the Corvette engineering group will develop just one transaxle for the initial phase of the C8 program, and that a dual-clutch automatic will be its choice. … After the inevitable weeping over the demise of the manual, life in Bloomington will continue. Mourners will probably be in the minority anyway — 65 percent of new Stingrays are delivered with automatics.

That’s a rather arrogant statement, whether it comes from C&D or its unnamed inside source(s). (The story was written by their veteran technical director, Don Sherman.) If two-thirds of C7 buyers are ordering automatics, then one-third are specifying manuals not because they’re faster than automatics, but because the driving experience is superior. Essentially GM is saying that manual drivers need not plunk down their money, which is a strange attitude for a corporation saved by taxpayer dollars, and a company that really needs to be more, not less, responsive to the public.

Then there’s this:

Alternative power sources are planned to keep the Corvette viable when regulations clamp down more aggressively on fuel consumption. Potent V-6s with and without boost are inevitable. Moving the engine behind the cockpit clears space for an electric motor to drive the front wheels; by 2020, a four-wheel-drive Corvette hybrid is a distinct possibility.

This is where I get off the train. GM, remember, has had more of its vehicles recalled in the past year than its entire 2013 production total, and for a rather simple (though potentially fatal) problem, bad ignition switches. GM’s hybrid, remember, is the money-losing Volt. GM has one, and only one, mid-engine car in its entire existence, the 1980s Pontiac Fiero.

Up until now, the Corvette’s success has been in large part not because of state-of-the-art technology, but because of high refinement of proven technology — for instance, pushrod V-8s instead of double overhead cams and four valves per cylinder, except for the King of the Hill ZR1. (And even at that, C&D’s long-term test Stingray blew its engine at 6,000 miles, apparently because of a bad oil filter. Their engine was replaced under warranty; had the engine blown five years from now, you would have paid upwards of $100,000 for an expensive lump of fiberglass, carbon fiber and various other materials.) There used to be 6,000 Chevrolet dealers in the U.S., which meant you were pretty close to a dealer if something went wrong. And of course an entire aftermarket industry serving only Corvettes grew, but there is less you can buy to upgrade your Corvette because there is less the aftermarket can do.

The V-8, in small (up to 6.2 liters) or large (once up to 454 cubic inches) block size, carbureted (up to three) or fuel injected, has been part of the Corvette experience for all but its first two years of existence. If I wanted a V-6 and an automatic (and call it whatever you like, if it doesn’t involve a clutch pedal and the driver’s making every shift, it’s an automatic), I would buy a minivan. No automaker has proven that a turbocharged or supercharged gasoline engine lasts as long as a non-charged gas engine.

I am not one of these people who hates every advance in car tech. Fuel injection (now that it actually works) is superior to carburetors. I like air conditioning. I need tilt steering because of my size. But I have owned cars long enough to know that the older a car is, the more things stop working — sometimes things that prevent you from driving the car, but more often things that prevent you, absent a huge repair bill, from using the car as it was designed. (By the time our first Subaru Outback left the premises at 228,000 miles, one side marker light, the rear wipers, and various interior lights had stopped working. The cruise control on Outback number two has never worked in my six-year ownership experience.)

The irony is that the C4 and onward have each made great strides in turning the Corvette into a car you could conceivably drive every day. (If you have no more than one passenger, of course.) Purists don’t like the hatchback, but the aforementioned golf clubs, along with luggage for a weekend trip, groceries, or whatever else can now fit. Advances in traction control mean you could drive a Vette in a snowfall (assuming you have the right all-season tires). I don’t like the elimination of the hidden headlights in the C6 and C7, but at least owners don’t have to worry about them not working. The 2015 Corvette is EPA-rated at 29 highway mpg, and Corvettes have been at least in the mid-20s in highway mpg for years. And the price, as I’ve chronicled in this space, makes the Corvette the best high-performance bargain on the planet compared with its Porsche, Ferrari and other competition.

C&D reports that this Corvette will be sold with the existing C7 until it’s phased out around 2020. When that happens, all Corvettes will be mid-engined, all apparently will have automatics, and some may not even have V-8s. I’d question whether this is progress, but I’m betting I won’t be able to afford a C8 of any kind anyway due to the obvious steep price increase for all the new, yet unproven, GM technology.


Crash for Clunkers

The Daily Caller reports:

“Cash for Clunkers,” the 2009 Obama administration stimulus program designed to spend $2.85 billion to jumpstart the auto industry, turned out to be a complete disaster — for the auto industry.

In the minds of Obama’s team of advisers and economists, the program made total sense, of course. The plan was to dangle a $4,500 credit to persuade car owners to trade in their older automobiles for new cars with better fuel efficiency. It would stimulate an economy then in the midst of a deep recession. As a bonus, it would mean less oil consumption and cleaner-running cars.

The law of unintended consequences is a brutal thing, though, especially for inexperienced, shortsighted policymakers.

According to the findings of three Texas A&M University economics professors, “Cash for Clunkers” ultimately caused auto industry revenue to shrink by about $3 billion in less than a year

The professors issued the results of their research last month in a National Bureau of Economic Research-sponsored working paper entitled “Cash for Corollas: When Stimulus Reduces Spending.”

“This highlights how — even over a relatively short period of time — a conflicting policy objective can cause a stimulus program to instead have a contractionary net effect on the targeted industry,” the trio of economists wrote, according to The Wall Street Journal’s Market Watch.

“By lowering the relative price of smaller, more fuel-efficient vehicles, the program induced households to purchase vehicles that cost between $4,000 and $6,000 less than the vehicles they otherwise would have purchased.”

For one month, the nearly-$3 billion program increased the sales of tiny, low-profit-margin vehicles. In the next few months, though, all sales faded rapidly.

Overall, the Obama administrative initiative produced exactly no net increase for the number of automobiles Americans purchased. …

In October 2013, researchers from the Brookings Institution came to a similar conclusion, notes The Washington Post.

In a paper called “Cash for Clunkers: An Evaluation of the Car Allowance Rebate System,” the generally centrist think tank’s Ted Gayer and Emily Parker similarly determined that the Obama administration scheme failed to stimulate the economy. To the extent the program improved the air quality and the environment, Gayer and Parker wrote, the cost was exorbitant.

That isn’t even a complete analysis of the trainwreck that was Cash for Clunkers, as two comments remind us:

  • Unmentioned in this piece is the effect which CforC had on used car pricing and who was impacted. Used car Inventories declined precipitously due to the destruction of “trade ins” thus resulting in a price spike which adversely affected those least able to buy a new car e.g. the underclass and first time car buyers.
  • Then there was also the loss of used vehicle parts, especially engines and transmissions. Those who needed those parts to keep their perfectly good cars running paid a premium, or weren’t able to repair them. America. Never ever vote for a utopian again. Period.