There is good news and there is bad news.
The bad news is that unless Corona Fever passes soon – not the virus, but the hysteria that’s been ginned up about the virus – the car industry will shortly topple like an unevenly stacked Jenga Tower with one too many logs already on top.
Rather, because of a belly-flopped launch – of the new Explorer – in tandem with what is arguably a catastrophic decision by Ford to “invest” in electric cars like the “Mustang” Mach E, which is actually a crossover SUV that has as much in common with a Mustang as breakfast has with dinner.
But it’s not just Ford that is in trouble – and for similar reasons.
GM has been trying to jump-start Cadillac, but the motor won’t fire. Because it is a motor. Not an engine. Electrified Cadillacs like the ELR never achieved the sales success of the Pontiac Aztec, but GM decided to make more electric models for which there are mandates – but not much market.
The same, by the way, as regards Tesla – which saw its sales tanking in tandem with the withdrawal of the federal $7,500 per car subsidy that enables most of those sales. When you stop paying people to buy cars, they generally don’t.
GM’s Chevrolet division also flubbed a critical launch – of a critical vehicle, the Silverado 1500. Which was – for decades – America’s second-best-selling truck, after the Ford F-150.
It isn’t anymore.
Not because people aren’t buying trucks. Well, not because they weren’t buying them. Rather they were buying other trucks – like the Ram 1500, which is now the second-best-selling truck in the country.
Because the restyled Chevy is widely regarded as hideously ugly, with a dumpster-looking puss combined with the marketing errata of putting a turbocharged four-cylinder engine under its hood, something as out-of-place in a full-size truck as the Rockettes at the Vatican.
But Ram has its own troubles – not because people weren’t buying Ram trucks – but because Ram (and Dodge and Chrysler and Jeep) were pre-Corona bought up by French car combine Peugot – which also acquired floundering Fiat s part of the deal.
Even the healthy car companies – Toyota, for instance (which is healthy because it has not bought into electric car fever to the degree most of the rest have and hasn’t flubbed its model launches) are going to be in a world of hurt very soon if sanity or at least proportionality isn’t restored soon. Because it cannot take not being out of business for weeks and months on end. Inventories of unsold cars are stacking up; dealers are being forced to close their doors. Debt is accruing. Balance sheets are in freefall.
Another 30 days and it will all be over. For what again?
As I type this, about 260 people in the United States are dead – the majority from a combination of old age and Corona. Or compromised immune systems and Corona.
In Italy, it is just over 4,000.
Depending on whose numbers you accept, the fatality rate for Corona is in the neighborhood of 2-5 percent. Which means 95 percent get sick – but do not die. This distinction is not being made, despite it being critical – to the economic health of everyone, the car companies included.
It is sad – tragic – that people are dying
But a far worse tragedy will be the cratering of the economic lives of the millions of people who work, directly or indirectly, for the car industry or those doing business peripherally. Not just GM, Ford and the rest but their suppliers and dealers; the people who rent them facilities; the people who cut the grass outside their buildings.
All gone, almost overnight – over fear about what might happen because Corona.
For one – after Corona Fever dies down – we may see a return of a market-driven rather than mandate-driven car business, for the simple reason that people will demand it because they won’t be able to afford the mandates anymore.
It is possible we may see cars that don’t “transact” for $35,000 – the average price paid for a new car last year – because the re-set that Corona Fever will trigger will make it economically unfeasible to mandate that cars average 36 MPG – no matter how much it costs us.
And no matter how little gas costs us.
Which could also put paid to electric car fever. A “business” predicated on paying people to buy cars when gas cost $2.40 or so a gallon becomes Marx Brothers preposterous when gas costs less than $2 per gallon.
We may even see brand-new cars (that aren’t electric cars) that can be bought for less than $10,000 – which cars you can already buy in many parts of the world already and before Corona, because not every country has mandates that effectively require every new car to have at least six and usually eight air bags as well as cost-to-benefit-ratio-ridiculous emissions technology, not for the sake of clean air but for the sake of “compliance” with an out-of-control regulatory apparat.
Rent-seeking and cronyism may just fall victim to Corona Fever – and those would be deaths worth celebrating.
. . .
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