For years I have criticized the government for its interference in the auto manufacturing business, from the ill-conceived café standards, the expediting of electric cars, the cash for clunkers program, and of course the auto bailout. And, I have not forgotten CEO’s who became weak-kneed under big government pressure, put aside the free enterprise system and bowed to corporate welfare.
Two recent announcements appear to support my position. On the heels of a study that labelled the Cash for Clunkers program a failure, comes a report that Cadillac can’t keep up with demand for its gas-guzzling Escalades, news that is sure to shake up environmentalists.
(Logo courtesy autodealerpeople.com)
A National Bureau of Economic Research working paper has revealed facts that the $3 billion, yes billion, two-month government Cash for Clunkers program subtracted between $2.6 and $4 billion from the auto industry. The program offered $4,500 if people turned in their old cars for destruction and bought a new car.
You will recall that goals were to lift manufacturers during the recession by subsidizing sales, while mollifying “greenies” by putting more fuel-efficient cars on the road. The report from a group of Texas A&M economists, shows that the subsidy didn‘t really create any extra auto business since those who participated were likely to purchase a car during that period anyway, and any environmental benefits couldn’t be justified.
GM cannot keep up with orders for its Cadillac Escalade. So much for the government pushing sales of economy cars. (Topspeed.com)
The idea that you could benefit the auto industry by destroying serviceable vehicles and entice consumers to buy replacements is further proof that the Obama administration simply doesn’t understand economics and free enterprise.
BIG SUVS, BIG SALES, Cadillac struggling to deliver Escalades, read the headline over an article describing GM’s predicament of having three times as many orders as they can supply. And, reportedly people are willing to wait for delivery. But GM’s inability to satisfy demands comes at a critical time as the company faces billions of dollars in recall payments.
GM’s other SUVs are doing well too, including the Chevrolet Tahoe and the GMC Yukon. Not to be ignored are sales of the Fiat Jeep Grand Cherokee and Ford’s big Expedition.
The Escalade gets 16 mpg in combined city/highway use. Note to the federal government: Don’t try to tell consumers what to buy. That goes for cars, health insurance, sugary sodas and whatever else you’re thinking about. And that goes for amnesty, too.
(Cartoon courtesy political humor.about.com)
