A measure of just how divorced from reality the car industry is can be gleaned from a news story making the rounds about General Motors electing not to build a rival to the massively successful Ford Bronco and Jeep Wrangler 4x4s.
At least, not one with an engine.
GM’s president, Mark Reuss, stated the other day that “I’m not gonna do a Bronco” because he doesn’t want to be “late to the party.” This is logic akin to GM deciding not to build the Camaro back in 1967 because Ford had already built the Mustang – which was selling in the hundreds of thousands annually. GM, of course, ended up selling millions of Camaros (and sister car, Pontiac Firebird) over the next couple of decades – because there was a market for cars like the Mustang.
Just as, today, there is clearly a market for 4x4s with engines like the Bronco – which is the most successful vehicle Ford has launched in a decade, at least. Sales of this model were up 234 percent in 2022.
That’s not a typo.
117,057 were sold. That is a huge number in absolute terms but when put in context, it is even huger. The Bronco is not a mass-market vehicle. Unlike, say, the F-150 pickup – which is Ford’s best-selling vehicle.
Except for the electric version of it.
The Bronco is not exactly practical, either. But it is extremely appealing, as measured by how many are selling. If Ford can sell more than 100,000 jacked-up 4x4s that get terrible gas mileage but deliver the compensatory fun and personality that people want – and are literally lining up to pay for – then why would GM not want to get a piece of that action?
Because GM no longer cares about the market. It is determined to build what there isn’t much, if any, market for. Like the electric Hummer, for instance. GM sold 854 of them during all of 2022, accounting for 0.2 percent of GMC division’s total sales. One can almost hear Dean Wormer form Animal House admonishing Mr. Blutarsky about his GPA.
Reuss says he doesn’t want to build a 4×4 like the Bronco because that would mean having to build vehicles to offset the effect of a vehicle like the Bronco upon the company’s Corporate Average Fuel Economy (CAFE) fleet average gas mileage numbers. He means that Ford must build hybrids and EVs – which use little or no gas – to make up for the gas used by vehicles like the Bronco.
This is chiefly why Ford builds the Lightning, even though it does not sell. Because it helps Ford comply. The Lightning’s EPA rating of 68 MPG “e” (your actual mileage will vary) is about three times higher than the non-electric F-150’s 21 MPG average and this has the same effect upon Ford’s overall CAFE score as getting an “A” in history has in terms of offsetting the “C” you got in history.
It is also the mechanism used by government to create “demand” for vehicles the market doesn’t want. Vehicles like the Hummer, for instance. And the Lightning. It is unlikely Ford would have ever committed the resources it took to build the latter if it weren’t for the need to offset what the government costs Ford to build the non-electric F-150 and other models that sell, such as the Bronco. Models that would be too expensive to sell, were it not for the losses incurred as a result of building models like the Lightning.
If Ford didn’t build Lightnings – and other EVs, like the Mach-e “Mustang” – to bump up (or at least, not lower) its CAFE fleet average MPG numbers, it would be socked with heavy fines for building what sells – models like the Bronco – which would then be passed on to buyers in the form of higher prices. Which would make it harder to sell models like the Bronco.
So Ford builds a handful of Lightnings and Mach-e “Mustangs” to make it cost-effective to sell 1117,057 Broncos. Which, by the way, would be much less expensive than they are if Ford didn’t have to waste millions building models like the Lightning. If there were no CAFE fines to pass on to customers.
Rather than build something that would sell – even if it cost them, in the form of building a few hundred electric Hummers to offset the CAFE fines for doing so – GM apparently plans to build more of what doesn’t, such as the 2024 Blazer EV. A “Camaro” electric crossover is also on deck.
These will meet with the approbation of the ESG crowd, even if it ends up costing GM everything.
Back in ’67, GM’s management understood that getting to the party late didn’t mean there wasn’t a party going on. Today, GM’s management doesn’t care about such things, which is a measure of how much has changed in the course of the 50-plus years since 1967.
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