Common Sense In The Automotive Industry

Yesterday The Washington Times posted an article about the Trump administration’s decision regarding CAFE (Corporate Average Fuel Economy) standards. The administration is freezing current gas mileage requirements rather than instituting the drastic standards put in place just before President Obama left office. Regulators required that automakers achieve an average 54.5 mpg by 2025, but they relaxed that target to between 50.8 mpg and 52.6 mpg last year. The argument against the draconian standards was that they would increase the price of a car by almost $2000 and create unemployment in the auto industry. The harsh standards would also make our roads less safe.

The Washington Times reports:

A draft of a regulation prepared this summer would freeze an Obama-era program that was intended to improve fuel efficiency and cut pollution.

In excerpts obtained by The Associated Press, the administration argues that heavier vehicles are safer than lighter ones and that people would drive more — and be exposed to increased risk — if their cars get better mileage.

Until we can come up with a material to make cars that is light, strong, and inexpensive, heavier vehicles are safer. American roads have many semi-trailers and trucks on them. A lightweight vehicle does not have a chance of survival in a crash with a heavier vehicle. Fuel economy is a good thing, but the safety of Americans is also very important.

Why The Government Shouldn’t Meddle In Business

President Obama is citing his bailout of the auto industry as one of his accomplishments. I wonder if he has seen the numbers.

The Detroit News posted a story today that a report by the Treasury Department has estimated that the government will lose more than $25 billion on the $85 billion auto bailout. That is almost a third of the cost of the bailout!

The article states:

The report may still underestimate the losses. The report covers predicted losses through May 31, when GM’s stock price was $22.20 a share.

On Monday, GM stock fell $0.07, or 0.3 percent, to $20.47. At that price, the government would lose another $850 million on its GM bailout.

The government still holds 500 million shares of GM stock and needs to sell them for about $53 each to recover its entire $49.5 billion bailout. At the current price, the Treasury would lose more than $16 billion on its GM bailout.

This is how much it cost the taxpayers to avoid General Motors’ going through a structured bankruptcy. The government bailout violated the basic bankruptcy laws. The bailout was nothing more than the taxpayers giving the company to the unions. This sort of activity needs to be avoided in the future!

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