Senator Obama in Detroit

5/8/07

In his speech to the Detroit Economic Club on May 7, presidential contender Senator Barack Obama blamed most of the domestic auto industry’s woes on the Big 3 automakers themselves. In making his argument, the Senator displayed the lack of economic depth that so concerns his handlers and supporters.

Senator Obama argued that if the Big 3 had invested less in SUVs and other large vehicles and more in fuel saving vehicles and technology, and had not resisted CAFÉ changes that “could’ve saved their industry,” domestic carmakers would not be facing many of the problems they face today. Senator Obama did not point out that the Big 3 put a lot of money into big vehicles because that is what the market demanded. For better or worse, the American people simply wanted, and continue to want, larger vehicles. Further, even when presented the choice of a more fuel efficient V6 engine in such large vehicles, customers clamor for the more powerful and thirstier V8. That was true when gas was $2.00 or less per gallon and it remains so today. Even last month, when gas was climbing steadily toward the astronomical heights we are living with today, sales of small cars fell 12.6% while sales of large SUVs climbed 0.2% and sales of only slightly more fuel efficient small SUVs (not crossovers) increased 16.7%. If Senator Obama had had his way, and the Big 3 abandoned large trucks in favor of small cars years ago, leaving the profitable truck market to the Japanese manufacturers, we wouldn’t be bemoaning the problems of the Big 3 today; we would be reading their obituaries. Those who think from reading the hagiographic coverage in the business press of Toyota and its counterparts that the Japanese manufacturers are far too virtuous to have jumped on such an opportunity were it presented to them should take a close look at the Toyota Tundra, Sequoia, and FJ Cruiser, all of which guzzle gas like a Chicago politician laps up largesse from corrupt developers and government contractors.

Some would argue that the American people demand larger vehicles because of Detroit’s extensive advertising and marketing of such vehicles. This is the school of thought that holds that people are mere witless automatons, blindly being led around by the pied piper of Madison Avenue induced popular opinion. People have no responsibility for their individual choices; they simply can’t resist doing what they are told. There may be something to this argument; after all, Senator Obama is in the very thick of the presidential race.


The Pontificator