2012: The End of the Automotive World?

The Mayans predicted the world would come to an end in 2012.

Maybe they were right, as this news from analyst Grant Thornton LLP could signal the end of times:

Foreign automakers will build more cars on U.S. soil than the Detroit 3… by 2012.

Epic, isn’t it?

The analysts predict by 2012 the Detroit 3 (I’ve retired my use of the “Big 3″ term) will produce 7.5 million vehicles, compared to an estimated 8 million produced domestically by the likes of BMW, Volkswagen, Honda, Toyota, and Hyundai. Most of those 8 million “foreign” cars will be built with non-union U.S. labor, which is enough reason for me to buy my “American” Toyota and be proud of it.

More good news: U.S. automakers should return to profitability by 2012, even if they reduce production by 35 percent from 2008 numbers. The bad news is for the suppliers, who will have to adapt to these changes in order to survive. I think many won’t.

The whole landscape of what “Made in the USA” means is changing. Does this mean the world is ending? Hardly.

More like a whole new one is beginning.

Are you bothered by the news that foreign automakers will, by 2012, build more vehicles in the U.S. than the Detroit 3?

-tgriffith

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Why People Hate Congress

The history of Cash for Clunkers offers a prime example of how Congress can make a total mess of a good thing. The Clunkers bill, which we described last week, demonstrates a history of special-interest pleading, unworkable and undesirable regulations, and political maneuvering—finally becoming tied to a $106-billion supplemental to fund the wars in Iraq and Afghanistan.

Sen. Diane Feinstein (D-Calif.) originally proposed Cash for Clunkers in January as a bill to promote fuel efficiency and environmental goals. Funny thing how the standards got rapidly watered down, and suddenly the bill was transformed into a “save the auto industry” effort by some Michigan lawmakers. The Detroit News and other major media now refer to it as a “program to spur new-car sales.”

People noticed that the bill would enable you to buy a new 16-mpg Hummer H3T in the light truck category and get a $3,500 voucher, because the mileage mandates got lowered. Others talked about how the bill would encourage scamming the dealers, buying up voucher specials, junking perfectly roadworthy cars, and so on.

In the Senate, Judd Gregg (R-N.H.) says that $85 billion in taxpayer assistance to the car companies is enough and, along with most Republicans, will try to get it removed from the supplemental war funding. (This is the first, maybe only, time I’ve found myself siding with Judd Gregg.) But wait, there’s more.

With the Democrats in power doing all these good things for everybody, maybe they’re banking on the fact that people won’t notice. But when Rep. Barney Frank (D-Mass.), right, calls up Fritz Henderson of GM to get a stay of execution for a parts dealership, anyone can detect the odor of influence.

Sen. Jeff Merkley (D-Ore.) pressured Chrysler to keep local dealers open; the company agreed to buy back 100 percent of dealer inventories. Rep. Ted Poe (R-Tex.) maintains that Democrats have deliberately shut down Republican-owned Chrysler dealerships. And so it goes.

The Congress seemingly can’t keep its hooks off the auto industry. “Well, we’re just supporting our constituents,” they claim. Yet President Obama pledged to keep the government out of the auto business, and maybe it’s high time that he speak for his constituents - that is, the rest of us.

How can Obama keep Congress from interfering politically in the operations of GM and Chrysler? Or is he powerless to do so? Tell us what you think.

—jgoods

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