Thirty Days and Maybe Less

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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.

Several major players were in dicey shape before The Fever struck. Ford among the notables. Its profits are down an almost not-believable 99 percent vs. 2018 – but not because Corona.

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.

Now add Corona – the viral fear, not the beer.

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.

The Black Death this isn’t.

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.

But there is at least some upside to all this downside. 

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.

. . .

Got a question about cars, Libertarian politics – or anything else? Click on the “ask Eric” link and send ’em in!

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  1. They’re all lining up for a bailout, it hasn’t even happened yet but the number being tossed around has already gone from $1trillion to $2trillion and counting, while the crumbs to be thrown towards us serfs seems to shrinking, with many strings attached.

  2. eric, I”m surprised you aren’t gung ho and giving big corp’s everything they want. Guess who is right in there with his hand out too, not to mention the richest men in the world.

    But don’t listen to me. I have simply stopped communicating with the RRRT about 5 minutes ago. I believe all sorts of “conspiracy theories” and am to be pitied. YOU pity me don’t you? I will accept cash if you pity me enough. After all, I am old and might be dead by next week(it’s that big black and white chopper I worry about).

  3. The world wide economy is built on debt. Once the general public is debt saturated, as in reaching their credit limit, such debt based economy can’t continue, and certainly won’t be buying cars. Which is why it was sputtering despite near zero interest rates. Voila, pandemic. “Not our fault.” Now the international banking cartel can simply confiscate the wealth of those in debt that have no means to satisfy their obligation. In other words, enslave them. Of course the Sociopaths In Charge could easily just tell such banking cartel to eff off, and refuse to enforce their claims. Of course they won’t, since the banking cartels are their masters. Such is the nature of fiat currency.

    • Right On Anon! Those are the people that make the world go around; not the useless, worthless, & extremely overpaid/overcompensated Public Serpents.

      And isnt it amazing how these same govt employees, of which 95% are democrat supporting-socialist advocating morons, become big believers in Capitalism during periods of crisis?

      Definition of right on
      1: exactly correct —often used interjectionally to express agreement

    • They better volunteer to run agriculture equipment if they want to eat. I’ll be speaking to a cotton farmer later today. I want to see what he’d planning on planting. He might let those really expensive machines that are not paid for go back and plant gardens and turn all that cotton ground into cattle feed.

      I’ll find out soon who thinks their shit don’t stink and will still be supported better than the rest of the people. New pickups may soon be going cheap, esp. those that are turned back. If it were me going to the Ford dealer, I’d be offering to haul off their mangled parts and stuff they can’t return for credit. There’s still a little bit of steel in automobiles though not much. And the price of steel is down but will it stay down? Will be still ship it all to China? Only time will tell but I have plenty space to store it till the “market”, and I use that term loosely, brings the price back up. And it may simply be the real-life version of the Hunger Games and I won’t be necessary in any way. The old, unneeded eater, to be turned into Soylent Green. I don’t know what happens when you fail to turn yourself in. Maybe they want my ammo. I’ll be glad to give it to them, one round at a time.

  4. There is a school of thought that this whole CF is the result of globalists wanting to achieve multiple long-term goals all at once, without the mess and bother of thermonuclear destruction. One goal in particular, forcing the largest liquid fuel market in the world back into dependence on the global supply chain (Saudi and others) seemed out of reach to them, until now. Once the shale plays collapse in the USA, back to business as usual, and that includes removal of our transportation freedom by electrification, this time via nationalized industry. Watch for calls to “bail out” GM/Ford in the future, and see if the poison pill of electrification is a condition of the “bail out”.

    No one “in authoritay” seems to tally the cost of not shutting down the USA in all this, do they? Makes you wonder why.

    If various actors can cause the opposite outcome coming out of this, awareness of the folly of being dependent on others outside your sovereign country for economic fundamentals, then perhaps we can make lemons out of this micturation being sprayed on us daily.