Germany, General Motors and a call for change
I’m living in Germany and read the information on this website very carefully, because if the US fails, then Europe will fail as well. That’s just one of the consequences of a global market. So what I did today was looking at General Motors. I never did before, because GM really isn’t a big player here, at least it’s not very obvious. So here’s my experience:
1) Opened http://www.gm.com
2) Right below a really big car in a green forest (!) you see a link "Tell Congress the U.S. Auto Industry Matters". Click on it and you get the following message:
From plants to parks. From dealerships to driveways. From gas stations to grocery stores. What happens in the automotive industry affects each and every one of us. In fact, the collapse of the U.S.-based auto industry wouldn’t just impact the nearly 355,000 Americans directly employed by the Big Three. One out of every 10 people in America is employed in a service that is related to the U.S. auto industry. If a plant closes, so does its suppliers, the local stores, the hot dog vendors, and the local restaurants. The effect would be devastating in ways of which you never have thought:
- Nearly 3 million jobs would be lost in the first year alone – with another 2.5 million to follow over the next two years
- Personal income in the United States would drop by more than $150.7 billion in the first year
- The cost to local, state, and federal governments could reach $156.4 billion over three years in lost taxes, and unemployment and health care assistance
- Domestic automobile production would more than likely fall to zero – even by international producers, due to supplier bankruptcies
The credit crisis that is affecting us all is wounding the U.S. auto industry in many different ways. Carmakers can’t get loans to restructure and to produce new advanced technology vehicles. Suppliers and dealers can’t get loans for routine business, and customers can’t get loans for new cars.
3) Go back to the home page (http://www.gm.com) with the big car inside of the green forest4) Click on "GM Vehicles" and in the popup click "GM Vehicles Home". What cars do you see?
2008 Saturn VUE, Up to 19 mpg city / 26 mpg hwy
2008 Buick LaCrosse Super, Up to 16 mpg city / 24 mpg hwy
2008 Saab 9-3 Sport Sedan, Up to 19 mpg city / 29 mpg hwy
2008 Pontiac G6, Up to 22 mpg city / 30 mpg hwy
2008 Cadillac CTS, Up to 18 mpg city / 26 mpg hwy
2008 Chevrolet Malibu, Up to 22 mpg city / 33 mpg hwy
2008 GMC Sierra Denali, Up to 13 mpg city / 19 mpg hwy
2008 HUMMER H3 Alpha, Up to 14mpg/city / 18 mpg hwy
I tried to find the smallest car in terms of consumption (ignoring the hybrid cars) and found:
2009 Chevrolet Aveo 5 Door, Up to 27 mpg city / 34 mpg
I looked at the details and saw that it has 107hp! Do you really need 107hp when you are not allowed to go faster than say 65mph? I then had to do some math, because we measure consumption in Liters per 100km:27mpg city = 27 miles per gallon = 27 miles per 3,785411784 Liter= 43,452288km per 3,785411784 Liter= 8,71l/100km What I consider acceptable is 7-9l/100km city and 6-8 hwy.What I consider good is 6-7l/100km city and 5-7 hwy.What I consider excellent is 4-6l/100km city and 4-5 hwy. Our next car will be in the range of 6-7l/100km, because we have two children and cannot buy a smaller car. To make it easier for you to compare cars sold in Europe, I add some calculations:
4l/100km = 59mpg
5l/100km = 47mpg
6l/100km = 39mpg
7l/100km = 34mpg
8l/100km = 29mpg
9l/100km = 26mpg
I drive a 6-year old Mazda MX-5 and need between 7.5 and 8.5 l/100km, equaling 28 – 31 mpg. I wouldn’t consider that a low consumption, but it’s a mixture of 15km hwy and 9km city with some stop and go. The only car at GM showing similar numbers is the 2009 Chevrolet Aveo 5 Door, but the difference is that the consumption shown on the web site is theory, whereas I have it in reality. The GM fleet is so damned misplanned that I’m going crazy about it. However, there never was a reason to change it, because as long as economy is fine and gas is cheap, why go for a smaller car? So it’s not only GM, it’s about the people buying their cars as well. So I could say it’s your fault, right? On the other hand, we face the same issues: Mercedes, BMW, Audi. Great cars, but not meant to be small. They are fast and look good, but they haven’t really invested in the future. Why not? Because there was no demand from us as well. Who wants to drive a car that is smaller and slower than any other car and have people pointing at you that you cannot afford a bigger one? Huh? That’s it. Unless we decide to make a change, the industry won’t change anything. And unless the industry doesn’t change, the government won’t either. One of the reasons why our cars a smaller than in the US are gas prices. Due to the massive decline in oil prices, we are now at €1.20 per Liter (but reached almost €1.60 in summer), which is 4,5424941408€/gallon or $5.90/gallon, using €1 = $1.30. That’s a big difference. Or take electricity: I just received a mail that we have to pay 20,79 cents (European cents) per kWh starting from January, which is $0.27 per kWh. That is a good reason to save as much energy as possible. Again, much higher than in the US. As long as energy is cheap, there won’t be too much people saving it. Do I want to say that energy costs should change in the US? I think so. Higher prices = less consumption. I know it hurts, but from the perspective of someone outside of the US, it’s just crystal clear. And it’s also the reason why the current cars you can buy at GM are big and not small. So is it GM’s fault to be in the current situation? Yes, of course. But what if they had decided to build smaller cars with less consumption? Were they be able selling it? Probably not. So it’s you, the people buying cars. On the other hand, would you still buy a big car with only 15mpg when gas it as $6 per gallon? Of course not. So it’s the fault of the government, because they should have had raised energy taxes long ago. But then some guys would have said:
If you increase energy taxes, then people have less money to spend. That could potentially cause some 100,000 people losing their jobs.
If you increase energy taxes, then people won’t buy American cars anymore and pick the cheaper cars from Japan, Korea, China, whatever. That leads to the statements you already found on the GM site.
If you increase energy taxes, then people will lose their homes, because they won’t be able to pay their debts.
I know this would have happened (or maybe it even happened in reality), because the same thing happens here! Whenever someone tries changing the rules, we hear that it compromises jobs. And that usually is a good reason to not change anything. So who are these people telling it over and over again? It’s the industry. Industry and banks are real buddies and they rule. The government can care about wars, as long as the ammunition isn’t purchased in foreign countries, because that could potentially send a few 100,000 people into unemployment.
So what’s the summary? As long as everything goes well, there is no need for changes. But if it doesn’t work anymore, then all of us are looking for someone in charge. That’s natural. I just want to remind everyone that you are in charge yourself. If you don’t start saving energy today and if you don’t stop the debt mania yourself, then the Fed finally wins and we play the game for another 10 or 20 years until it finally crashes. We can decide to face the consequences ourselves or let our children do. I have two young sons and prefer doing it myself, though it won’t be easy.
Just to be clear: I like the US and was there about 15 times. Great country, nice people and I’m always looking forward to the next visit. But Europe is staring at you and whatever you do will be copied here. They just don’t have a backbone strong enough to do something different. If you invest trillions in renewable energy, then Europe will do as well. If you spend more trillions in bailout programs, then we will do as well.
I don’t like this situation, but it is as it is.
Happy Thanksgiving anyway.
Here’s the prices for Denmark.
Currently the gas is at the lowest its been for several years which is 5USD pr gallon. This summer the price was at 7.6 USD pr gallon.
We also have the worlds highest income taxes and the worlds highest tax on cars. The income tax can be as high as 66-67% and the tax on cars 180%.
Let’s put this into perspective. In 2002 I bough a 1993 Honda Civic 1.6 VTI 3 door in Germany for 6900 USD. To register it in Denmark I had to pay 8600USD in taxes. So the total for a 9 year old car with 60k miles on the clock was 15500 USD.
A similar car in the US at that time cost around 5K USD. So it’s triple the price.
Let’s take another example. I had a colleague from the US working here in Denmark for a couple of years. When he returned to the US he bought a brand spanking new BMW M3. The cost in the US at that time was 55k USD.The price in Denmark was 190k USD !
About fuel economy. I recently had a Lotus Elise from 1998. I never did less than 34 mpg and I managed to get it to 43 mpg. And this is a british sports car that does 0-60 in 5.6s 🙂 Pretty good,eh ?
I currently drive an old diesel Volkswagen Passat with 295k miles (470k km) on the clock. It averages 47 mpg ! This is an old rusty POS from 1993.
And don’t get me started with the price of electricity 🙂