commentary (2007-03)

The Detroit We Deserve

Pumping gasoline into oblivion

The Detroit We Deserve

by Matt Edens

Al Gore may be all about Global Warming, but the real inconvenient truth for U.S. carmakers may be that the main emission they’re producing is the aroma of desperation. Overall, American auto sales slumped 2.6 percent for 2006, with total vehicle sales dropping more than 400,000 to about 16.5 million.

What’s worse for the “Big Three” is that their numbers dipped even deeper than the overall industry decline. GM dropped more than 8 percent, Ford almost as much and Daimler-Chrysler dropped more than 5 percent of its market share—which reminds me, the traditional “big three” of Detroit automakers is just that these days: tradition.

It’s been almost a decade since Chrysler merged with German automaker Daimler-Benz. And, last year, Toyota’s robust 12.5 percent sales growth pushed the Japanese company into the No. 3 spot in U.S. auto sales and positioned it to possibly outpace Ford this year (Toyota already outsells Ford worldwide and is within a half-million cars of knocking industry giant GM off the top spot).

But the bleakest bit of news for Detroit may be that light truck sales dropped by 5.6 percent. That category, which includes pickups, SUVs and minivans, is where the American auto industry makes most of its profits (when it makes any). Passenger car sales, by comparison, increased 1.8 percent.

Last summer’s surging prices at the pump probably account for much of the shift, as some consumers downsized to smaller, more fuel-efficient vehicles. Gas prices have dropped for the moment, but the long-term trends aren’t good. There’s the ongoing unrest in Iraq, tensions with Iran, nobody seems to be running Nigeria, and the guy who runs Venezuela is no friend of ours. Unsettling as all that is, the real depressing news may be that the world’s four largest oilfields—Cantarell in Mexico, Burgan in Kuwait, Daqing in China, and Saudi Arabia’s gigantic Ghawar field—are all in depletion mode. Together those four fields produce nearly 15 percent of the world’s crude.

In light of all the above, the brightest spot in this week’s Detroit Auto show just may be the Chevy Volt plug-in hybrid. Detroit in general and GM in particular have lagged behind Toyota and Honda in hybrid technology. But the Volt may be a signal that General Motors is getting serious. An evolution of the entirely electric EV-1 (which many critics claim GM killed), the Volt differs from current production hybrids such as the Toyota Prius in that its three-cylinder gasoline motor doesn’t directly drive the car at all. Instead it powers a generator that only charges the car’s batteries. The car can also be charged overnight via an electrical outlet, hence the plug-in part.

But the best part may be that the Volt can go about 40 miles before the generator ever kicks in. For the average commuter, the Volt could function as a purely electric car (DOT studies show that 78 percent of commuters travel less than 40 miles per day). You could go weeks, maybe months, without filling the tank. And, while the electricity still has to be generated somewhere, GM claims the Volt will produce 4.4 metric tons less carbon dioxide annually than a conventional car.

The downside is that the Volt is still currently a concept, albeit one that GM hopes to have in a showroom near you in the near future. As in all electric vehicles, batteries remain the biggest hurdle, particularly ones that will last the life of a vehicle. But that’s still less of problem than the inconvenient truths of the so-called “hydrogen economy” (like, say, where does the hydrogen come from?).

The big question may be whether we’ll actually embrace plug-in hybrids like the Volt. Conventional hybrid sales, while growing, remain a tiny niche market. So tiny, in fact, that of all the new models unveiled in Detroit this week, only one was a hybrid (and it, the 2007 Mazda Tribute, is essentially a re-badged Ford Escape). Who knows, maybe the Detroit Automakers will disappear like the dinosaurs, riding their gas-guzzling ways into oblivion. But if they do, they’ll be in good company.