The imperative for car companies to sharply adjust to rising fuel prices is far greater than energy companies moving to alternative fuels. As we know, the energy companies rake in huge profits when oil gets expensive. What GM hasn’t done for years, it’s beginning to do – make sharp cuts in production of gas guzzlers and aggressively move on schedules of fuel efficient cars. Today GM announced plans to shut down four truck and SUV plants and committed to bring the hybrid Chevy Volt into production. And it’s one of the most aggressive companies with respect to hydrogen fuel vehicles. It’s a remarkable series of moves for company known for lethargy and sacrificing its future for short term profits. For years, it refused to move away from gas guzzling trucks and broaden its portfolio with hybrids and vehicles that sip instead of guzzle gas. Following Ford’s cue with the Verve, GM also committed to doing a global car.
Make no mistake about it. Car companies are in a state of crisis across the board. For May, Ford reported a 16% drop in sales while perennial performer Toyota posted a 4.3 per cent decline. For the first time ever, the Toyota Camry and Corolla each outsold the aging Ford F-150 pickup, according to the Wall Street Journal. And for May, GM’s were in freefall, plunging 28%. It would seem large SUV production is headed into the car crusher.
Oil prices know no ceiling although the commodity is trading on fear, not on any marked shortfall in crude or refined products. It’s a sorry and scary state of affairs. The good news is that it has motivated car companies to do what they should have years. Now we just have to get the energy sector moving faster.