Auto Schizophrenia (National Review, 04.03.10)

Posted by hpayne on April 3, 2010

Detroit — Under assault from Washington on global-warming regulations and tort litigation, the U.S. auto industry still managed a 24 percent sales gain in March as it continues its climb out of the worst sales recession in 30 years.


Leading the sales charge were SUVs — jumping 26 percent — which drew even with cars at 50-50 market share. The consumer’s increased preference for light trucks was in defiance of EPA rules — announced the same day — that target SUVs for elimination by mandating 35 mpg for all vehicles by 2015.


Toyota — the target of tort lawyer-scripted Democratic hearings alleging the company makes runaway “death traps” — also defied Washington in posting a 41 percent sales gain after a disastrous February plagued by bad publicity and record vehicle recalls. Goosed by cash incentives and zero-interest loans, Toyota saw gains in all its major products.


The mixed signals — Washington mandates for green virtue on the one hand and consumer hunger for big truck performance on the other — are whipsawing the auto industry. The industry’s schizophrenia was on display at the New York Auto Show this week as companies highlighted Pelosi-preferred, EPA-mandated, money-losing hybrid-electric vehicles even as their bottom line benefited from the sales of large-profit-margin trucks. Ford, for example, saw its Explorer and Expedition SUV sales rocket up 70 and 80 percent, respectively.


The industry might use these numbers as a teachable moment for Washington. Yet Ford CEO Alan Mulally instead embraced more Big Government intrusion in Big Auto with a keynote show speech demanding a “national energy policy.” Such policies in Europe and Asia mean a doubling of federal gas taxes that drive gas prices to $6 and beyond — polices that punish large vehicles and drive consumers into the low-profit, “earth friendly” cars government covets.


In keeping with the week’s mix of messages, however, a Ford spokesperson said that Mulally was not advocating an increase in the gas tax.

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