Hiroshi Okuda, chairman of Toyota Corp. is considering hiking prices on vehicles sold in the U.S. in an effort to help out Ford and GM.
Here's the article from MSNBC.com.
My favorite quote: "General Motors Corp. and Ford Motor Co. are symbols of U.S. industry, and if they were to crumble it could fan nationalistic sentiment."
"Symbols of U.S. industry" indeed. I'm ashamed that our symbols of industry are incompetent, inefficient behemoths that couldn't build an efficient, reliable, affordable vehicle if their lives depended on it, have been propped up time and again by taxpayers because they're incapable of forming an efficient business model, and use the power of government intervention in the market to maintain their incumbency. They all should have gone down in flames years ago, and we should all be driving Tuckers and Hondas. Yet another perfect example of how consumers, taxpayers, and laborers take it up the 'chute as a result of government involvement in the economy.
Labor unions create their own issues by using government to force businesses to pay higher wages or provide more benefits than what the market would otherwise bear. This drives up production costs, thereby driving up prices and causing a decrease in overall sales. The cycle ends with plants closing and the very laborers who fought for higher wages in the first place out on the streets.
Artificially low interest rates and the profligate availability of credit have helped create a market for overpriced, extra large, gas-guzzling SUVs. That market is slowing down as gas prices and interest rates rise, and GM and Ford will be hard pressed to recover the billions they've invested in it.
Their failure (or in this case, the lack thereof) now stands to increase prices for vehicles from foreign manufacturers, leaving consumers with a choice between cheap, unreliable domestic cars and expensive, reliable foreign cars. Interesting how it's come full circle.
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2 comments:
Ron, I'm impressed with both the polemics and the economics of this post.
I do think that the Tucker automobile is over-hyped. Tucker failed for a variety of reasons, and one of them was that he was mistaken in his beliefs about auto buyers and their preferences.
And you forgot the third option, which is cheap, reliable Korean cars. They're not the joke they were 10-15 years ago. They're also not as well-made as Honders and Toyoters, but they're not that far away.
Wow...that's quite the complement! Course, I did have to look up "polemics", but that's just cuz I don't have a collidge edyucashun.
I agree that Tucker made some erroneous assumptions with his first model, but I do think that he was astute and innovative enough to quickly learn that and adjust to bring his designs more in line with consumer trends, while still leading the way in terms of design innovation. He certainly scared the hell outta the incumbent manufacturers.
And yeah...Korean cars are getting better and better. How long will it be before quotas are imposed on Hyundais and Kias?
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