Posted tagged ‘California Emission Standards’

Environmental Foolishness

October 30, 2019

Three major automotive manufactures, GM, FiatChrysler, and Toyota showed a sorry lack of vision (or backbone) when yesterday they announced support for the Trump Administration’s “lower” new car emission standards.  Rather than join Honda, Ford, BMW, and VW and agreeing with California’s standards, GM, FiatChrysler, and Toyota chose to go it alone.  Why?

Of course we may never know for sure but here are some guesses.

  • Avoid continued confrontation with Trump Administration.  The prospects of Trump Administration disrupting the supply chains for all three or initiating trade wars with new tariffs, GM, FiatChrysler, and Toyota all want to avoid short term business interruption.  Go along and get along.

 

  • Avoid investing in lower emission technologies in order to maximize current balance sheets.  With the current glut of oil, gasoline prices should remain attractive for consumers.  Why offer them hybrids and all electrics when demand is still weak and future consumer demand is not assured?

 

  • Why change in times of uncertainty.  GM, FiatChrysler, and Toyota have coldly calculated that any backlash from environmental groups can be managed by continuing to offer a range of lower priced cars which do not reflect added costs for environmental controls.

Regardless of how these companies justified their decision, the wisdom behind joining the Trump Administration on weaker standards than previously accepted during the Obama Administration, may prove to be short sighted.  The Trump Administration may end in 18 months or so, and any Democrat President will be likely to return to California influenced goals.  Maybe GM, FiatChrysler, and Toyota will simply shrug and say, “nothing ventured, nothing gained”.

Beyond the hard nosed business aspects, all car companies want to make and sell what consumers want, but the Wall Street ideal route is often viewed as the path with the least change.  This is the mentality of a dying industry when a product as important as a motor vehicle can not foresee the potential for changing environment’s unanticipated consequences.

Since the late 1970’s when Japanese Automotive Manufacturers invaded North America with automobiles which already met stringent California standards, the Big Three missed the wake up call.  The Japanese did not have one car for the Japanese market and another for the US.  Japanese vehicles were “world cars and trucks”.

The behavior of GM and Chrysler is, sadly, not that surprising.  They thirst for a “no change” world that does not exist.  Rather than lead, GM and Chrysler want the world to stand still.  Hmmm.  The Trump world has no soul and gets it relevance from winning one-offs.  Not a wise option to align your company’s future to.

What is more perplexing is Toyota’s  behavior.  Have Toyota’s Lexus, fully decked out Camrays, and pick up trucks grown to such a significant share of today’s sales that Toyota has lost confidence in change, and by default, leadership?

The Trump Administration’s track record on loyalty to friends seems like a “fair weather” policy, and any Trump support is always secondary to what wins today.  This announcement reflects brightly upon GM, FiatChrysler, and Toyota’s environmental foolishness.  

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