The bad news keeps piling up for Capitalists. The central planners in our government are throwing their weight around more forcefully than ever.
Hybrid automobile sales have fallen off a cliff. This February the total number of hybrid sales were 2/3 less than in April of 2008. The market is clearly providing feedback: hybrids are not in demand. However, thanks to government intrusion into the auto industry via bailouts automakers now feel compelled to make hybrids to appease politicians.
…automakers feel they have little choice but to make more hybrids. Though car buyers are losing interest, politicians are pushing them as key to reducing U.S. dependence on foreign oil and limiting the global-warming gases Supply & Demand: Dead in the Auto Industry?that cars emit into the atmosphere.
In January, President Obama called on the industry to “thrive by building the cars of tomorrow” and prepare for federal and state regulations that could push average fuel economy above 40 miles per gallon by 2020.
“The automakers are in the situation of needing to pacify politicians that are in the position to bail them out with expensive fuel-efficient cars,” said Rebecca Lindland, auto analyst with IHS Global Insight. “But shouldn’t it be more about satisfying the needs of the American consumer?“
I couldn’t have said it any better myself. Obviously the only way the automakers will regain financial health is by making vehicles that people actually want to pay for. Instead they are making vehicles that socialist politicians like. “Supply and demand” has been transformed to “bailout and command”.
Let this be a lesson for CEO’s on the brink: accepting bailouts is the financial equivalent of selling your soul. You buy yourself some breathing time but you get a massive ball and chain clamped to your ankle. I feel no pity for executives who think they are taking the easy way out.
This is a chilling thought but the seeds of a command economy are planted.