After fears that it might follow companies like Hudson and Studebaker into that good night, General Motors has reported a profit of $1.33 billion. In fact, all of the Big Three seem to be turning around; in Canada in July, sales of domestic nameplates were up 18%, while import nameplates as a whole dropped by 3%.
In the U.S., according to Edmunds.com, it's big trucks that are leading the resurgence -- the vehicles the Big Three do better than anybody else.
It's an inescapable fact: the vehicles people are buying are the vehicles that the letter-writers and the government don't want those companies to make. You can cite gas prices, you can cite greenhouse gas emissions, you can point a finger out to BP's mess in the Gulf, but the fact remains: given a choice, consumers buy big vehicles. And those big vehicles drive the automotive industry's wheel.
The size of vehicles moving off dealer lots is in direct proportion to what's on the gas station sign across the street. Prices go up, little cars go up. Prices go down, little cars go down. And whenever gas prices hike up, the letter-writers bemoan the fact that car companies aren't making enough little cars. I suspect these people have no clue how the auto industry actually works, because I think they seriously believe that auto companies work like the local bakery: white flour's expensive today, we'll make brown bread, and see what's costly tomorrow.
Most of the letter-writers have it backwards. Don't tie the auto industry to the price of gas; tie the price of gas to the auto industry. Why does Europe buy small cars? Because gas is four times what it costs here. If the government were really serious about fuel economy and greenhouse gas emissions, it wouldn't even be talking to the automakers about what they're going to build. It would be talking to the gasoline companies about what they're going to charge.
