Wednesday, May 10, 2006

THE BEAST IS LOOSE . . . AND HE WANTS US TO BUY GASOLINE

Yahoo! News Headline Watch:
Lack of Supply Reduces Hybrid Sales

Again, we get this strange phenomenon of anthropomorphism in the headline. "Lack of Supply," a member of the genus, bullshitus unbelievablus, is on the rampage again, destroying the will of consumers to actually purchase cars that require less overpriced fuel.

According to the President of Toyota U.S., "We sold down our inventory. We're down to a two-day supply. The fact is, demand has never been higher."

Demand has never been higher . . . yet they've sold down their inventory. I've gotta a suggestion for them: Make More!

I'd think they were a buncha freakin morons if I didn't suspect them for the venal liars they are (and I'd think they were a buncha venal liars if I didn't suspect them for the freakin morons they are).

Seriously. You're a car company. The consumer wants better gas mileage (let's pass for now on the bigger issue, that consumers want to drive their cars until the last drop of oil disappears from the earth as average summer temperatures in Minneapolis reach 134 degrees and hurricanes destroy every city on every sea coast). Yet, you can't seem to get the product to market, as your industry takes killer hits every week, and consumers and politicians alike scream about fuel costs day & night.

It's moments like this that so blur the lines between stupidity, obsolete business practices, collusion, & back-room deals that I can honestly say I don't know what to think anymore.

13 Comments:

Blogger Jim Robb said...

Mike, you might want a look-see at this in support of your argument. differentJim

3:00 PM  
Blogger Jim Robb said...

http://www.iht.com/articles/2006/02/10/business/truck.php

3:00 PM  
Anonymous Barry said...

Hey, Mike -
Yup . . . kinda' goofy over at CFN last eve. Your take on the 'beast' was great! Whenever I think of auto-makers, here or abroad, I can't help but remember GM and the streetcar debacle. Like they say, "Follow the money."

3:06 PM  
Blogger Mike said...

Jim-

I assume you mean this link:

http://www.iht.com/articles/2006/05/10/business/toyota.php

I just skimmed the article and I think this line is interesting: "one source of Toyota's strength was finding a balance between supply and demand by keeping factory output slightly below consumer appetite for its vehicles. Analysts said the strategy created a constant state of mild scarcity that propped up prices and avoided the large inventories of unsold vehicles that has proven costly for GM and Ford as they try to restructure."

I can't, and won't argue for them if they're trying to avoid the disasters that have befallen Ford & GM.

Thanks for the link.

3:20 PM  
Blogger Mike said...

Meant to say "won't argue with them," not "won't argue for them" above.

5:15 PM  
Blogger Mr Furious said...

Yet Ford is forced to offer incentives to unload the Escape hybrids...

12:23 AM  
Blogger Mike said...

Furious-

Is the Escape just a bad product? What do you make of that?

7:28 AM  
Blogger Dwilkers said...

The problem with hybrids from what I've read is the technology just isn't mature yet. The batteries aren't good enough. The car makers fear them because they don't yet know what maintenance will look like and how long they will hold up, etc.

As it happens, I want one so I've been looking into them as my wife's car needs to be replaced some time this year. $3 per gallon gas is something I've been expecting for a long time, plus I just like the idea of wasting less and using gasoline the way we do strikes me as enormously wasteful.

There was a decent article on them in Scientific American recently. They way they are developing there are 3 types - full, mild and minimal hybrids. The minimal hybrid is little more than an 'off at idle' type thing like an amusement park car that starts when you push the gas pedal. None of them plug into your garage electrical outlet to recharge at night as yet.

I also read in Car and Driver recently that - I can't remember which year specifically, I'm going to guess it was for 2002 - the total sales of hybrids in the US was 60,000. That is a tiny fraction of a percent os annual US auto sales, and you can't just take an auto production line that is designed to make 10k cars per year and turn up the volume so it suddenly puts out a million.

8:43 AM  
Blogger Dwilkers said...

Um, sorry for the length.

Here's how it plays out though.

In our case we live in a Houston suburb and my wife works in Galveston. She drives about 28 miles one way the majority of which is freeway driving at 65mph. Also since this is Houston the air conditioner is used on almost every trip year round. It is not unusual at all for the air conditioner to be needed on Christmas day in Houston.

Hybrids make the most of their abilities when they are used in stop and go traffic though - instead of the usual EPA mileage ratio that looks like 20 city/ 30 highway a hybrid looks like 40 city/ 25 highway. As they are currently offered (again, the tech is immature) they run the gasoline engine at highway speed meaning you get a very minimal increase in mileage on the highway. Worse yet they run the gasoline engine continuously when the air conditioner or heater is turned on.

So basically in their current form unless you drive in stop and go traffic all the time and never use a climate control they really do not offer much. And the premium is several thousand dollars plus you have to get on a list and wait 6 months to get one in many cases.

It just...isn't working quite right yet.

8:45 AM  
Blogger Mike said...

Dwil-

Thanks. Please forward your annotations and sources to me, so I can have my assistant check your accuracy.

Seriously though, your points sound right to my ignorant, layman ears. The auto makers need to turn their assembly lines around, so as to get more of these bad boys to market.

But, and this is why I find that link that Jim sent yesterday so interesting . . . it would seem that they have every reason to do this right away. *Unless* they're deliberately trying to let demand build, as they keep supply low. This allows for higher prices later on.

They can do this if they choose -- no evidence, yet, of collusion between manufacturers -- but I can call bullshit when they make up lame excuses for why supply's so low.

Either they misread the market, or they're letting momentum build. I think it's the latter.

And none of this, of course, answers the suspicions I have that the 75+ year system of "cooperation" between Big Oil & Big Auto continues. I never looked at the voting record, but I'd assume Michigan lawmakers in DC voted pretty overwhelmingly for the Interstate Highway Act back in the fifties, you know.

9:21 AM  
Blogger Dwilkers said...

Mike, I think this was the SciAm article I am talking about. I am not a subscriber though and it is behind a subscriber wall unfortunately. Notice the second paragraph says US hybrid sales doubled from 100k to 200k between 2004 and 2005.

On the total annual US auto sales figure the only thing I can come up with in the limited time I have is this which references total US light auto sales of roughly 18 million for 2006. 200k / 18 mil makes hybrid sales around 1%.

There's a chicken and egg thing there of course.

And don't get me wrong. As I say I want one. I just don't want one that doesn't really work.

I should have said that the Scientific American article I was talking about also says the problems I was talking about (poor highway performance, climate control efficiency issues) are on the verge of being resolved by better tech. They think soon hybrids will plug into your garage to recharge and the climate control will run (and work better too) off of electricity. The batteries will work much better, the dynamic braking (charging the batteries using the brakes) will improve significantly, range will improve, etcetera.

9:53 AM  
Anonymous donna said...

Hmmm...hard to say, of course, what the freakin' hell is wrong with the automakers' heads. I am reminded of a time when I was 19, in college, living next door to a person who worked in a managerial capacity of some sort for GM. He told us that GM knows how to make cars that last 20 years and get 50 mpg, but they will never, never make them because they =want= planned obsolescence--gotta sell more cars! Can't have everyone chilling with well-made products that last for decades.

11:19 AM  
Blogger Mr Furious said...

Is the Escape just a bad product? What do you make of that?

I don't know. I think Ford failed to effectively market these vehicles the first time around more than anything. Hence the aggressive new Kermit the Frog/Easy Being Green campaign.

The Escape was also probably overmanufactured in its V6 form and they probably didnot have hybrids on the lots. Does anybody even order cars anymore? Or do people walk in and drive off...

"Six weeks for a hybrid? I guess I'll take the red V6 over there."

AKA: "You'll have to wait six weeks foor a hybrid, what do I have to do to get you inb that red V6 over there...?"

(p.s. I am pulling this all out of my ass...)

4:11 PM  

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