Over a Barrel

The SMART ForTwo. 60 MPG. Sold in Europe, Canada and Mexico sonce 2001. Now re-engineered for improved stability and safety and arriving in the US in 2008, courtesy of Mercedes.

Thirty-two years ago Congress enacted the Corporate Average Fuel Economy bill to force US auto manufacturers to increase fuel-efficiency in response to the early- to mid- 1970s’ oil crises (over the objections of Big Auto of course).

Now the Senate is working on new legislation and once again the US auto-industry lobbyists are putting up a fight, using much the same arguments as they did 32–years ago:

Increasing fuel efficiency will cost too much! Cars will have to be made lighter so they won’t be as-safe and people will die! Workers will lose jobs! It can’t be done!

The auto-makers aren’t entirely wrong, but it’s not the fault of legislation. It’s their fault.

Take the latest “retro-cool” Mustang (that Ford hoped would be as a big a success as the original). The base version uses an iron SOHC fuel-injected 4-liter V6 that provides 210 HP and delivers (supposedly) 19-28 MPG. It still uses a live rear axle, just like the 1964 original (even the super-performance Shelby 500 version Cobra has the same axle)

The “retro-cool” MINI Cooper S however uses a DOHC aluminum 1.6 Liter fuel-injected turbocharged 4-cylinder producing 172 HP and 177 Ft.lbs of torque) and reaches 60 MPH in practically the same time as the Mustang but delivers (supposedly) 29-36 MPG—thanks to it’s modern and efficient engineering.

The US auto industry has had 30 years to read the writing on the wall—that smart engineering resulting in efficiency, quality and reliability sells just as well as styling---but they stuck to styling and left others to advance the engineering, even as they continually lost market share.

The one thing Big Auto could take comfort in and profits from was the SUV market, which true to form didn’t require any engineering effort on their part—just styling and marketing. The “safety” argument for SUV’s (that if you hit a smaller vehicle you’ll survive and the others won’t) has lost its appeal in the face of rapidly rising gas prices. Fuel efficiency is the biggest concern now.

Ford has attempted to address this with their Escape Hybrid (engineered by Mazda, by the way) but it costs $3000-more than the Prius whilst delivering 20-less MPG. You can’t go off-roading in a Prius but how many people go off-roading anyway? Ford’s hybrid isn’t even outselling the regular Escape (despite its vastly superior MPG).

With fuel economy increasingly important (and even critical) to many consumers the Big Three have nothing of their own to offer, whereas the Japanese are responding with more hybrids as well as with conventionally-powered economy cars like the Scion, the Fit, and the Yaris—which are incidentally also cheap enough for the increasingly beleaguered working class to reasonably afford.

And now even Mercedes, that icon of luxury and wealth, thinks the time is right for the absolute antithesis of the traditional American automotive philosophy of "bigger is better" with the 2008 introduction to the US of the 60 Mpg SMART ForTwo.

Whether the SMART will actually turn a profit in the US is anyone’s guess:
It hasn’t made a profit in Europe yet (thanks in large-part to the vast range of cheap and efficient four-seat alternatives) but even in a market where small is both the norm and an advantage in both town and country the truly tiny SMART has still been very popular and practical.

The original Mini was unnecessarily small and economical for the general US market when it was introduced in the 60’s. But the US learned to love smaller cars in the 70’s and thirty years later the technologically advanced and relatively efficient new MINI continues to sell very well whilst. for instance, the technologically-challenged and inefficient (and newer) Mustang has already seen a 20% drop in sales this year.

If “free market forces” really worked as the Friedmans of this world insist they do (or should) then the Big Three would have spontaneously responded to the 70’s oil crises with more-efficient (and better-engineered and more reliable) “all-American” vehicles. But even when increased efficiency was mandated by the government Big Auto influenced the CAFÉ legislation so that all the effort to improve efficiency could-be and was outsourced—resulting in layoffs of American auto workers.

The Prius was introduced to the Japanese market in 1997 and in a more refined version to the US in 2001. The MINI likewise was developed in the late 1990’s and debuted in 2001. The SMART also entered the market in Europe as a 2001 model. All of these were thus on the road before the 2003 US invasion of Iraq that has significantly contributed to the current fuel crisis.

US auto makers found themselves “over a barrel” in the 70’s, by accident. Thirty years later they are again “over a barrel”, but this time by their own design—or rather a willful lack of design. When it was founded the US had reason to claim and shape the future, but in a remarkably short span it is now "over a barrel"--literally and figuratively--and the current plight of the US auto industry and thier current protestations over the new legistlation is a salient example of the attitudes of this nation's elite self-serving, myopic, out-of-touch and whining elite.