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Smaller cars mean smaller profits for Ford

So, we get smaller cars, which are mandated via the regulations issued by governments, which are supposed to save energy and to save the environment.

Consequentially, we get smaller cars, which means smaller profits for car makers. Smaller profits is the same as less income to a company, which then has to lay off people, and in the least, not hire new people.

Another consequence of smaller cars is that, the oil/gasoline industry will also see less in profits, since people won't need to be filling their gas tanks as often. That too means less income to the distributors and retail gasoline outlets, which again means, people getting laid off, or in the least, no new hires.

Even one more consequence of the smaller cars is that, a smaller and less expensive car, is not made as well as a more expensive and bigger car. Which means that, those cars won't last as long, and people will have to make new purchases of automobiles more often, which means that, there will be less disposable income to consumers for other goods and services not related to cars, which means that, other industries will see less money available to consumers for purchasing their goods and services. The domino effect in the economy (aka: the repercussions to the rest of the economy) is something that, government officials and the people who advocate for big government, never mention or pay attention to when they're drawing up their regulations and bills and laws.

So, we end up with micromanagement of economies by government, and no growth anywhere in those economies, and oftentimes, contractions of those economies.

Smaller cars does not necessarily mean that they will be made less well. Also, there are unintended consequences in economics for every way that you look at it. For every change that is ever made there will be consequences that end up screwing over some people. It's annoying, but it's true. Also the government isn't the one mandating smaller cars, the article mentions how people are shifting to smaller cars themselves. The shift to smaller cars is being caused by consumers, the market at work.

to win over the gullible, but, those gullible are not smart enough or knowledgeable enough to understand that, there will be consequences.

Yes, there are consequences to everything, but, the environmental movement and the massive number of regulations that government has enacted to deal with the environment, have, for the most part, been detrimental to all economies where they have been implemented.

We can have good policies and we can have bad policies, but, the one clear thing is that, the more government gets involved in running our lives, and the more government gets involved in trying to dictate to businesses on how they should run or what they should build, the worse it is for the economy. That is being witnessed all over the country, and even around the world.

You aren't too keen with observing what consequences are, and how it's more like a domino effect.

The people might be looking for smaller cars, but, before that, came the regulations which forced the car makers to make the smaller cars, because, government wanted to force a higher MPG standard on all car manufacturers. And, why are people looking for the smaller and higher MPG cars? Because gasoline prices are very high, and people dont want to spend so much on fuel, with are more than doubled in 4 years. So, what is the major cause of higher energy prices? Again, it's government intervention into the energy sector, which prevents the oil companies from drilling within the U.S and off our shores. That causes a supply and demand crisis, which forces the oil companies to go to other countries to purchase the oil, which will cost a lot more than if it were produce here at home. Foreign oil causes our higher gasoline prices, and thus, to try to reduce our dependence on that foreign oil, our government has demanded that car makers make better MPG cars, and the easiest way to do that, is to make them smaller. That is not what Americans wanted, and it was forced on them by government.

Think, and think again, because, you failed at following the causes and effects, where the effects are the real consequences which you don't understand how they wee caused.

...and keep making excuses for why you love your gas-sucking, ultra-polluting SUV. The rest of us, who actually care about leaving an Earth to our children and grandchildren, will continue to push for smaller, more efficient, low-emissions cars. Consumers are the ones pushing this small-car movement, so blaming "government officials and the people who advocate for big government" is flat-out ludicrous and clearly shows your bias.

By the way, having worked with retail gasoline distributors in the past, I can tell you that 99% of the gas stations in this area sell gasoline "at cost," therefore profit margins have nothing to do with gasoline sales to these businesses. Lowered need for gasoline will have minimal impact on them, so one of your arguments bites the dust.

Fuel savings alone can make up for a significant portion of a vehicle payment. In my case, downsizing means that the balance between fuel expenditures, car payments, and insurance from a minivan that got 16mpg to a small car that gets 45mpg balance out to a monthly expenditure increase of only $47 per month. This is to get a vehicle 10 years newer which pollutes significantly less, gets three times the fuel mileage and has a warranty. That "bigger payment" that won't let me afford many things never materialized and another of your arguments fails as well.

Smaller cars may mean smaller profit margins, but that doesn't necessarily mean less income to the company. Smaller prices on smaller cars mean more people can afford to upgrade, therefore, vehicle sales may well increase. That would make up for the smaller profit margins by volume sales. Your third argument just keeled over.

While none of the three of these is guaranteed, neither are any of your arguments. Therefore, stating your arguments in such a manner, without a disclaimer like this one, that makes it appear that these "unintended consequences" are guaranteed is pure and simple bias and misinformation. Stating that this is the effect of governmental regulation, rather than the consumer pressure that it actually is, is a flat-out lie.

-Jason

if we really wanted people to use less fuel/oil, we should be fighting for bigger, less efficient cars.

Smaller, more efficient and inexpensive to operate cars only mean that people will drive more, and their numbers will actually stimulate the demand for more fuel overall. The new CAFE standards will do absolutely nothing to reduce demand for oil. Just the opposite.

If CAFE standards worked in reverse, mandating lower mileage, operating personal automobiles would ultimately become unaffordable to most citizens, forcing them either onto public transportation or into living in more concentrated economic centers, which is what the Progressive Utopians say they really want.

you might be right about the extra driving that people might be tempted to do with the better MPG cars. But that in itself, is also a negative, since, like I mentioned in one of my posts above, a smaller car with depreciate faster than a bigger care, and it a smaller car is driven moe because of that better MPG, then, that car will be "aged" faster, which will create a demand for the consumer to have to make another purchase sooner than he would with a bigger car. Smaller cars might give better MPG, in absolute terms, but, in the long run, and like you said, it's going to present an incentive to the owner to drive it more, thereby obliterating whatever advantage the smaller vehicle had.

But, there will still exist the people who don't understand the consequences of regulations, and will continue to vote, naively, vote for those who pass the feel good regulations and legislation.

and where I explain to people who are so clueless, so as you, why people are moving to smaller cars. Hint: it's not because they wanted them, or because they actually cared about the environmental impact of gas-guzzlers. In fact, most people wont give a crap about the environmental impact of whatever they drive. Most people care about making their money reach farther.

...whether you like them or not. Whether you accept the fact or not, you are completely incorrect that people do not want smaller cars. Your cause and effect statements are entirely based around economics. The problem with that is that there is a growing community, including myself, that doesn't care if we have to spend a little extra to save the planet from destruction by the companies and people like you that fight against these regulations. We institute such regulations and vote for them, NOT because it makes us "feel good," but rather because we KNOW that these industries will NOT, in any way, shape, or form, regulate themselves or protect the environment without being FORCED to do so. If you believe differently, you are the clueless one.

So you go on believing that your environmentally-destructive lifestyle that you are advocating for is OK. The rest of us will fight to ensure that Earth is here for our future generations and to save it from the raping by dirty industries the best we can. Environmental destruction is a very bad thing - regardless of how much it benefits us economically. Money isn't everything, although that's what you'd like us to think...

If people wanted smaller cars, they'd buy them. They've been available for decades.

What you are really doing is attempting to dictate the behavior of others. I can think of many regulations that would be far more beneficial to the environment than dictating what kind of car you can buy. But I hesitate to suggest them because people like you would immediately label me a fascist for advocating such policy.

And you'd be right. But no more so than you are already.

Did you actually READ the article? Seriously, please try to absorb all the information in an article before you comment to avoid looking like you do now. The article clearly states - and can be backed up with evidence - that consumers ARE buying smaller cars and enough of them that auto manufacturers are concentrating on the market and expecting profit margins to decrease because of it. So, your comment of "If people wanted smaller cards, they'd buy them" is a bit idiotic in light of the entire premise of the article.

Regulations aren't dictating what type of car you can buy. They are simply dictating an overall fuel economy average and emissions requirement covering the entire range of vehicles a manufacturer sells. Thus, they can continue to sell gas-guzzling, pollution machines like the Hummer, Chevrolet Suburban, and the like, but they will have to counter such vehicles with a strong small-car offering to balance the numbers. If they have trouble doing so, that is the manufacturer's issue, not the problem of the people who want to buy them. I'm strongly in favor of gas guzzler taxes as I believe if you want to destroy the environment for my children and grandchildren while we try to save it, you should have to pay for doing so. Hitting people like you in the pocketbook is the only thing you tend to understand, so let's make it hurt. Many other things hurt me, especially the belching exhaust from your SUV since I had a lung collapse and had to have a chunk of it removed. My low-emission vehicle doesn't hurt you, but your noxious polluter DOES hurt me.

Corporations have shown that they only care about the bottom line over and over and over again. They won't regulate themselves. Therefore, regulations such as the ones mentioned are the one and only way to force these corporations to take responsibility for their actions and their impact on the environment. Thus, regulations are a necessity, whether they, or you, like it or not. You can suggest whatever you like, but, as you mention, you may receive a label for doing so. One moronic policy suggestion does not a fascist make, so it's unlikely I would use that terminology unless I saw you regularly suggest fascist policies and ideologies (which is also unlikely as I just don't read many articles on Smart Planet anymore because it's been overrun with people like you and Andornoe advocating for environmental destruction on a site designed to advocate for environmental preservation).

...but not because the government is forcing them to.

Corporations do care about the bottom line. That is why they ultimately will build what the customers demand. Or else someone else will, like they learned in the '70s.

because, when it comes to gas-guzzling vehicles, the owners are and have been paying penalties for owning and driving them.

First, they're paying much higher prices for those gas-guzzlers, and much more in taxes.

Secondly, they are paying a lot more for gasoline, because, they do use a lot more gas, and with a lot more gasoline consumed, they are paying a lot more in taxes.

Small cars have always been available, but, the American consumer has always preferred the bigger cars when they could afford them. Now, the smaller cars are demanded by government regulations for better gas mileage, and we've ended up with the majority of cars made being either tiny or small or medium sized. A full-size care is a rarity. American manufacturers are not being as profitable as in the past, because, like the article states, there is a lot less profit to be made with the smaller cars.

The cause and effect that has the auto industry almost begging for a profit, cannot be divorced from the effects on the economy. The economy is always affected when a major sector has to make do with a lot less profits.

The environmental wackos along with their liberals supporters in Washington, have virtually destroyed the auto sector, and eventually, it will die. We'll be left with just foreign made cars. Either that, or the auto industry will have to be nationalized, which will, in the end make things a lot worse for the industry, and for the economy, and for consumers.

No one should be in denial about the effects of government intervention, and it's not about whether I like it or not, or whether it's about protection of the environment or not; it's about an industry and an economy that are dying. Period.

The environment will be irrelevant when the economy goes into depression. People might end up throwing rocks at you if you were to indicate to them that, destroying the economy was a necessity in order to save the environment.

So, why not start using your head, instead of buying into the environmental wackos talking points.

corporations are regulated into building what the government dictates, then there will be no choices for either the consumers or the corporations.

Consumers are buying what seems more appropriate at the moment, because of high prices of gasoline (which again was a problem created by big government), and because the economy has made too many people unable to afford the bigger vehicles which they desire.

...that it's government regulation that has caused most of the dis-allocation.

For example, few people realize that it was the CAFE standards of the '70s that spawned the SUV boom of the '90s. SUVs are basically the modern incarnation of the station wagons that were popular through the '70s, but were basically outlawed by the CAFE standard.

...paying you to post here? Because they really should hire someone else that doesn't let their ignorance show so easily. Nothing is ever as simplistic as you want to make it look. Car size does not directly affect auto manufacturers' profits to the point that it will be the causal factor in the death of the American auto industry. The American auto industry hasn't been really competitive in the market in many years. Quality is sub-par compared to imports, especially when considering General Motors. I much prefer to buy American, but I want my vehicles to last as American-made ones fail to do so in comparison to the imports I've owned. Unions, demanding more and more money for wages, pensions, etc. are as much at fault for the rising baseline costs and dropping profits as the small car switch is and it continues to get worse. Yes, small cars may be less profitable, but to suggest that they will be the downfall of an industry is irresponsible and laughable. I do feel sorry for those that will lose their jobs due to overpowered unions and the profit-driven decisions that the auto manufacturers will make to sacrifice quality even further than the already pathetically low standards they use. But, maybe that's the wake-up call this nation needs to understand that we have to be competitive to succeed.

By the way, in case you haven't noticed, the economy has already tanked to a certain degree. This is mostly from the effects of bad corporate decision-making that required government handouts to rectify. We bailed out banks that were lending at unsustainable sub-prime rates and we bailed out the auto manufacturers that can't really afford the astronomical wages and pensions that the unions demand for their workers and who are allowing quality to suffer in the name of profits making them less than competitive with imports. Companies, and industries, rise and fall every day. They do so on their own merits; whether they bring a competitive product to the market and effectively market it. If not, they fail and we let them. Honestly, Ford is the only auto manufacturer that should still exist in this country on the scale that it does. GM and Chrysler had to run to "daddy" and beg for money to stay afloat...I bet I can name dozens of small businesses that would love to have a multi-billion-dollar sugar daddy like that...

Companies will come and go. Our environment is here to stay. Whether that environment will be habitable for our children and grandchildren is my primary concern. What good will Ford, GM, and Chrysler be if we strip our environment of its natural resources and degrade it to the point it can't sustain life? This "bigger is better" and "throw-away" mentality in America is slowly shifting and small cars are only one part of the downsizing, environmentally-friendly trend. Do a Google search for "Tiny House Movement" and learn something for a change. It might open your eyes to the reality behind this shift to small cars (and homes). Our environment is our life. We'll live without SUV's, McMansions, and the like. We won't live without protecting what sustains us at the very basic level...

because, you disregarded every point I made, and you continued to make the same points you had made previously.

To begin with, the article itself makes my point that, automobile manufacturers are making less profits with the smaller cars. So, that's not a point that I had to make, but was made by the people who wrote the article; but I do agree with the premise.

Secondly, I'm not employed by any car company, and I'm not employed by anybody in government, and in fact, I'm not employed by anybody. What I do, is all independently of any private or public entity. Mostly, I'm a concerned citizen who gets tires of the bull-droppings that so many with agendas try to mislead the public with.

Car size is not the direct killer of the auto industry, but, one cannot debate the fact that, a smaller vehicle will be less profitable to a car company. And, with more of a manufacturer's vehicle being demanded to be of the gas-saving type, more and more vehicles will be built of the smaller variety, which then makes profits hard to come by. The lesser profits that a company gets, the more probable it is that that company could go out of business. Low profits cannot maintain a healthy business, which then means, fewer jobs in the economy. Those are logical points which should not even be open to debate.

You are correct about the quality of our vehicles becoming sub-par, and a lot of that has to do with union labor, where the unions and the membership become complacent about producing quality products since, for decades, they've had guaranteed jobs with guaranteed benefits and, basically, little chance of getting fired. When there is no incentive to produce quality work, then, the quality will suffer. The unions have been basically, a division of the democratic party, and when they have so much power with Washington politicians, then the major auto companies were stuck between a rock and a hard place, and thus, the companies had to give in, and essentially, give the unions the power which they have wielded so effectively against the auto companies. The unions gained, while the auto companies suffered, and the quality suffered.

Then, the demands for "clean cars" and fuel-efficient cars, drove the car companies to produce the smaller cars, which most people didn't want, and came in more expensively. The bigger cars that are being produced are beyond most middle class and poorer workers, and so, they're stuck with buying the smaller cars, and the manufacturers are making a smaller profit on each of them. Essentially, it was a combination of unions and government demands which is killing the car companies. Even the higher gas prices is because of government intervention into the production of oil.

There is not a single point which I've made which is incorrect or can be debated. You might want to argue and remain in denial, but the history of what has happened to the auto industry and to the economy in general, can't be denied or disputed.

the economy.

No doubt that there have been some bad decision-making with corporate entities, but, that is not what brought down the economy.

The economy was brought down in 2007-2008 by the collapse of the housing market. The housing market is has nothing to do with auto manufacturers or the computer industry or supermarkets or department stores or agriculture or the clothing or shoe industries, or any other industry. Most other industries were performing fine.

The downfall of the economy was due to, like I said, the housing market. The housing market affects every other industry, because, purchases for the homes drive a lot of other industries. With people losing their homes or losing a huge amount of value in their homes, their purchasing power was tremendously decreased. With decreased spending, the ripple effect through the rest of the economy was unpreventable.

So, what caused the housing market's downfall. There again, it was government intervention into that industry, with government dictating to banks and lenders that, they had to make sub-prime loans to the poor and others who where completely unqualified to get those loans. People were getting sub-prime loans with no-money down payments. Those loans were being purchased by Fannie Mae and Freddie Mac, in order to erase the loans from the books of the banks and lenders, so that they could make a lot more loans. Fannie and Freddie were the buyers of last resort for the sub-prime loans, and a lot of banks were also stuck with a huge number of bad loans, which proved to be their undoing. But, those banks were, essentially, gambling with those loans, and they paid a very hefty price for their sleazy practices.

But the fact remains that, it was government mandates which forced the banks into the bad loans, where the feds threatened the banks and lending institutions with loss of licenses and other penalties, if they didn't make those loans. Look up the CRA bill and the enforcement legislation which Clinton passed.

And so, we again end up with government's heavy hand contributing to the destruction of the economy.

The auto industry may have had its own problems with the unions and some bad management decisions, but, the economic downturn and the gas prices, contributed to the problems which plague the auto industry at the moment. With the purchasing power of consumers having been downsized, the consumer had to downsize the number of purchases, and the size of those purchases.

Things will continue to get worse from here on out, with corporations already indicating that they are not going to hire any new people for a long time to come.

The U.S. was downsized tremendously in 2007-2008, and we will continue to be downsized.

"...when the constraint is binding CAFE standards act as a shadow tax on large cars and a subsidy on small cars, discouraging the production of the first and encouraging the production of the second.

From the FTC, 1988.

Without the subsidy from large cars, the smaller ones will become more and more expensive.