GM Reshuffling Won't Solve the Problem

Rick Wagoner's ouster by President Obama hardly fixes General Motors' wagon. The extent to which GM did not get it, refused to get it, and never will get it was evident late last week. The same day that the government posted new fuel economy standards that raise the industry-wide vehicle standard to 27.3 miles per gallon in 2011, GM proudly announced the 2009 Cadillac Escalade Platinum Hybrid, "the most technically advanced large luxury SUV yet."

By combining electric power with gasoline, the Escalade will deliver 20 miles per gallon in the city. "This is the ultimate Escalade," said Mark McNabb, a Cadillac vice president, ". . . for the changing priorities of luxury consumers who want dramatic design and technology combined with fuel efficiency."

Meanwhile, automotive writers in the United States and Canada have been taking test spins of the 2010 Toyota Prius. Toyota claims it will get 50 miles per gallon in combined city and highway driving. Reviewers have been getting 60 and even 70 miles per gallon. A model of the 2009 Prius earned best-car value honors from Consumer Reports. Los Angeles Times business writer Dan Neil calculated that a far better stimulus than the one being proposed for the US auto industry and clean energy might be for the government to spend $46 billion a year for 10 years to provide Americans 20 million US-assembled Priuses and get cars that get 15 miles per gallon off the road. That would eventually save 170 days worth of OPEC oil a year.

"That will give Hugo Chavez insomnia like a case of Red Bull," Neil wrote.

That is a huge hint that as earnest as Obama may be in wanting to save Detroit, the issue is no longer whether the car maker is American. It is whether the car is made in America. In a speech yesterday in which he gave GM 60 more days to restructure and Chrysler 30 days to merge with Fiat or another automaker, Obama bravely held out hope for a turnaround by saying that the North American Car of the Year in 2008 was from GM and that Buick tied for first place as the most reliable car in the world (in rankings this month by J.D. Power and Associates).

"No one can deny that our auto industry has made meaningful progress in recent years, and this doesn't get talked about often enough," Obama said.

The problem for Obama is that progress on individual cars does not deny the dismal overall picture. Of the very J.D. Power ranking for Buick cited by Obama, USA Today reported that overall, GM cars "were all over the map. Cadillac placed a respectable ninth. GMC, Chevrolet, Saturn, Pontiac, Hummer, and Saab, however, were below the overall average, even though some Buicks share common chassis or are built on the same lines."

And, of course, there is a reason Obama had to reach back to 2008 for a US automaker champion of the North American award, because in 2009 it was won by a Hyundai. After its annual testing of vehicles, Consumer Reports recommended 100 percent of Subaru vehicles, 95 percent of Hondas, 89 percent of Toyotas, and 70 percent of Fords. Only 17 percent of GM cars and zero percent of Chryslers were recommended. None of the 41 cars that earned a "best-value" designation from Consumer Reports were from GM, Chrysler, or Ford.

Instead of rearranging the board chairs on this Titanic, Obama is better off planning how to let GM and Chrysler sink in a manner that does not suck down the overall economy. Let Ford or foreign automakers who pledge to expand US operations absorb the few reliable and fuel-efficient sedans Americans make, trim down the plethora of pickup trucks and minivans, and do away with large SUVs, where no amount of green technology can disguise the rolling smokestack.

Obama yesterday said he was confident the auto industry could once again "tap into that same ingenuity and resilience" it once had. It is too late. The engines from Japan are passing 50 miles per gallon. GM still brags about a Jurassic that gets 20.

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