Current GM Chairman Bob Lutz, during all of the pomp and circumstance that surround the Detroit Auto Show, gave an interview and made several statements that are not only infuriating, but also highly inaccurate.
It would seem that Mr. Lutz is still operating in the Lee Iacocca world of automotive engineering, where poor fuel economy is an inevitability except in the smallest of vehicles. It would also seem, as a result of this, that Mr. Lutz is not in touch with reality.
Specifically, Mr. Lutz’s claim that meeting the proposed 35mpg fuel standards will result in a sticker price increase to consumers of anywhere from $6000 to $10000. Although this seems like a rash overestimation and, quite possibly, an exaggeration.
Just for the sake of argument, let’s take a look at GM’s August 2007 sales figures as a baseline estimate for the price increase. According to Jalopnik, General Motors reported 388,168 vehicles sold in the month of August, which was a 5% increase in sales over the previous year.
388,168 multiplied by $6000 (on the low end, for benefit of the doubt) is $2,329,008,000.
That’s almost $2.5 Billion.
I think we can all agree that that’s a lot of money.
So essentially, Bob Lutz is telling us that in order to produce a moderate increase in fuel economy (because 35mpg is nothing compared to the first Honda Civic, which was capable of 40mpg highway in 1972, or the 1980 model which achieved 55mpg highway), General Motors would have to charge an additional $2.5 Billion for their cars. As a current owner of a GM vehicle, I can tell you flat out that even if brand new, my car would not have been worth another $6000, and even if the gas mileage increased by 10mpg, it still would not justify a $6000 increase in sticker price.
What Mr. Lutz is saying is that achieving this proposed level of fuel economy will require parts made from new, space-age, lightweight compounds, as well as brand new powertrains that are developed from the ground up for the expressed purpose of achieving great fuel economy. However, various other auto manufacturers (namely Honda, Toyota, etc.) seem to be capable of increasing fuel mileage with the existing internal combustion platform, and utilizing presently available systems of fuel delivery, ignition, and the like.
Thus, not only does what Mr. Lutz spouts off happen to have no basis in reality, but he is also ignoring the blatant fact that, if his company had begun even speculative development of increased fuel economy vehicles 5-10 years ago, they would not only have a leg up on the competition, but would likely have found ways to minimize the cost increase per vehicle to a couple hundred dollars.
I will grant you that a GMC Envoy and a Honda Civic have little in common other than 4 tires. However, in the last 20-30 years, advances in fuel delivery systems (such as fuel injection and intakes) and advances in lubrication/friction-reducing technology should have had a much larger impact on average fuel economy than they currently have. I find it ridiculous that a small car like a Chevy Cobalt can only muster 32mpg highway, when in fact other small cars (of similar size) that have come long before the Cobalt could best that number easily.
Mr. Lutz is obviously clinging to the status quo argument, claiming that there is nothing wrong with current fuel economy, and the market has not demanded an increase. But this is also a flawed argument. The advent of $3/gallon gasoline has forced upon the industry a series of changes that they collectively should have engaged in and undergone many years ago. Ignoring the need for improved economy and technology simply because the federal government did not force it to happen is akin to someone not putting out a fire because no one was there to instruct them to do so.
At this point, even Ferrari, a company that has never had any concern outside of sheer performance and horsepower, has announced that it is developing methods to increase the fuel economy on their ultra-powerful sports cars.
In addition to his flawed logic, Mr. Lutz seems to think that the difference between 20mpg and 30mpg really only costs consumers an extra $30 per week, and that this figure is small beans to people.
This coming from a man who, in addition to his padded stock portfolio, most likely makes several million dollars per year in salary, benefits and additional compensation. Obviously, $30/week means nothing to Mr. Lutz.
However, last time I reviewed my bills, I was pretty sure that $120/month would pay for my cable, internet and water. So you can see that there is a discrepancy there between what $120/month means to each of us.
In the end, this is not the first time that Mr. Lutz has caused me to feel an ulcer coming on, and barring his timely resignation, it may not be the last.
There was a great comment on an article I read recently, to the effect that Bob Lutz was so bad at his job that he must have been planted at GM by Chrysler, hoping to bankrupt the company.
If only that were true.
