Car Wars

Just perusing over this New York Times article, which says that, despite the increasing prices of gas, Detroit intends to roll out "muscle cars", i.e., big gas guzzlers.

I'm old enough to remember, back in the 70s, when there was an "oil crisis" and gas prices jumped to a dollar. Gas had been something like 40 cents or so then, so the jump to a dollar was huge. Worse still, there were shortages so people had to get in line to get gas (presumably because some places were closed).

During the 70s, there was a push to smaller cars, and imports gladly filled the void. The German VW bug was popular, and small Japanese models were also popular. The US has often had trouble keeping up due to its history of large cars and the belief in the industry that what Americans wanted was large cars.

During the 70s, car ads almost always listed gas mileage. You were told how well the car did in city vs. highway driving. By the 80s, when gas prices became stable around a dollar (and even into the 90s), this information was dropped off the ads. Why tell people how fuel efficient the cars were? Instead, car manufacturers wanted to push bigger cars. SUVs and minivans became people's joy and pride. (Well, maybe not the minivan, but it became essential for families with kids, replacing the less sexy station wagon).

That's what I think is happening in Detroit. They had no idea gas prices would stay this high this long and probably planned these large cars from the get go. With the designs nearing completion, they're simply going to push the cars on the market anyway, and hope advertising will convince Americans that they should spend, spend, spend.

But there's a more insidious reason to push bigger cars. More profit. Smaller cars have smaller profit margins, so Detroit, in its short sightedness says they won't build cars that won't make them money. Meanwhile, people are more likely to buy smaller, more fuel efficient foreign cars.

Remember the 70s? Chrysler was in big trouble, and asked the government to bail them out with a loan. Chrysler managed a comeback on the strength of its charismatic boss, Lee Iococca, and was able to pay off the loan (one imagines). Are we going to face such a situation again where Detroit complains things aren't fair? Rather than have the Japanese to blame, they have themselves and high gas prices to blame.