CAFE What's it doing to the industry?

[GTAHVIT]

thanks Congo,

I'm still wondering why CAFE for 2020 is preventing the possibility of a blown camaro today?

I've been to their web site and it is sooooooo confusing.

[mega]

Originally Posted by Zhawk

On question, where is the source of this? I haven't seen ANYTHING like this, crude oil prices yes, not wholesale gas.

it's all over the news right now

[mega]

Originally Posted by Zhawk

I've been whatching the market and $6 is not right around the corner. I'm not against market driven changes but the extremism of $6 a gallon gas in today's economy will do what I just said and cause more problems that it would cure. Our supply isn't THAT slim, we just have a bunch of people who know how to make a profit of news, sensationalism, and panic.

I dont mean today, or next week, but it WILL get that high, we will run out, it's a fixed resource it's not unlimted

our supply is so slim that knoxsville is out of fuel, they are buying it from other areas right now

http://blogs.knoxnews.com/knx/silenc..._gas_sho.shtml

[The_Blur]

Originally Posted by gtahvit

thanks Congo,

I'm still wondering why CAFE for 2020 is preventing the possibility of a blown camaro today?

I've been to their web site and it is sooooooo confusing.

This can be, in part, explained by speculation.

Ah, yes—speculation is everyone's favorite market phenomenon.

We'll use gas an the example. The following paragraph is not based on fact, so do not hold me to it.

Assuming that gas is someday going to peak, we can make several statements. If we know the time that gas will peak, prices will suddenly rise. It will be undesirable as a resource because it won't last forever. It doesn't have to rise when drilling production goes down. In fact, it will go down the moment that investors become aware that gas is not an infinite resource. They will try to liquidate their investment immediately, raising the value of a barrel due to its sudden historic rarity.

Let's apply this similarly to the Z28. Assuming that the Z28 violates GM's need to fulfill federal regulations, it must be produced in low volumes, driving up the price per unit and the price of production which further drives up the price per unit. In effect, the price per unit is now preposterously expensive, yet the desire to obtain a unit is very evident because the resell will be high. Just like a barrel of gas, the value will only go up, so people would want a CAFE-violating Z28 because it would be an instant classic. GM would love to produce an instant classic, but they have already done that with classics in the past all the way up to the modern ZR1. The problem with producing the instantly classic super Z28 is that such a car costs a lot to build. If there are only a few units, each has to be built specially, inspected differently than other models, use certain workers that could be doing something else, carry parts that only that car uses, take up spots on lots that aren't going to vacate any time soon, and have features to justify its ridiculous price. Every single one of these reasons is a reason that some great cars do not make production. They all come down to the money, and even the enthusiasts within GM know that they can't sacrifice the whole company for a legendary machine.

Be patient. There are a lot of good people in GM that would love to see a return to classic American cars. Some of those may already be on the roads, not being noticed today but becoming classics in a generation or so. I strongly believe some supreme Camaro will eventually be built.

[Design1stCode2nd]

I agree with you Dragoneye to a degree. GM made exactly what people wanted and made money hand over fist. Now where I blame GM is not knowing that this ride wasn’t going to go on forever and banking some of those bucks on improving the entire lineup including small cars. They saw huge profits on the large $40-60k SUV’s and neglected the rest until they couldn’t. Now they are scrambling to adjust to the market.

Katrina should have been a wakeup call that hey, we are vulnerable, we need to improve the entire portfolio and even if we don’t make much on small cars we should still strive to make the best small car. But they didn’t and now they are where they are. The problem with GM is it’s a big ass ship and its slow to react. Combined with entrenched bureaucracy that has rusted the tiller so it fights you whenever you want to make a turn. In the end what would be best for GM is to file Chap. 11, shed the needless brands, shed the bloated dealer network, downsize and become focused, firing most of upper white collar workforce. It would be a renaissance of the US auto industry.

I’d do away with dealers and franchise altogether but that isn’t going to happen. Direct from the factory, go to an auto mall with 20 different brands to choose from and just one or two testers of each car in inventory.

[GTAHVIT]

Originally Posted by The_Blur

This can be, in part, explained by speculation.

Ah, yes—speculation is everyone's favorite market phenomenon.

We'll use gas an the example. The following paragraph is not based on fact, so do not hold me to it.

Assuming that gas is someday going to peak, we can make several statements. If we know the time that gas will peak, prices will suddenly rise. It will be undesirable as a resource because it won't last forever. It doesn't have to rise when drilling production goes down. In fact, it will go down the moment that investors become aware that gas is not an infinite resource. They will try to liquidate their investment immediately, raising the value of a barrel due to its sudden historic rarity.

Let's apply this similarly to the Z28. Assuming that the Z28 violates GM's need to fulfill federal regulations, it must be produced in low volumes, driving up the price per unit and the price of production which further drives up the price per unit. In effect, the price per unit is now preposterously expensive, yet the desire to obtain a unit is very evident because the resell will be high. Just like a barrel of gas, the value will only go up, so people would want a CAFE-violating Z28 because it would be an instant classic. GM would love to produce an instant classic, but they have already done that with classics in the past all the way up to the modern ZR1. The problem with producing the instantly classic super Z28 is that such a car costs a lot to build. If there are only a few units, each has to be built specially, inspected differently than other models, use certain workers that could be doing something else, carry parts that only that car uses, take up spots on lots that aren't going to vacate any time soon, and have features to justify its ridiculous price. Every single one of these reasons is a reason that some great cars do not make production. They all come down to the money, and even the enthusiasts within GM know that they can't sacrifice the whole company for a legendary machine.

Be patient. There are a lot of good people in GM that would love to see a return to classic American cars. Some of those may already be on the roads, not being noticed today but becoming classics in a generation or so. I strongly believe some supreme Camaro will eventually be built.

I need to think about this.....

[The_Blur]

Originally Posted by gtahvit

I need to think about this.....

Basically, I'm saying that GM can't afford to spend the resources on a Z28 and that those resources will be spent when they are available and when it doesn't kill GM's environmental law-abiding production. A Z28 will exist when it doesn't significantly bring down GM's CAFE rating. This will happen when less trucks and more compacts are being produced and sold.

The thing about CAFE is that it puts a ceiling on performance, or at least a floor on fuel economy, and those restrictions will lead to less efficient cars in the future. If GM can't build a low efficiency car in 3 years, why should it develop one now? The cost of R&D isn't at all justified. Instead, GM needs to make some bank to justify the expense of R&D on an efficient and powerful Z28. Unless it can be as efficient as it is powerful, the Z28 will hurt GM's green approach.

[Mr. Wyndham]

Originally Posted by Design1stCode2nd

Katrina should have been a wakeup call that hey, we are vulnerable, we need to improve the entire portfolio and even if we don’t make much on small cars we should still strive to make the best small car. But they didn’t and now they are where they are. The problem with GM is it’s a big ass ship and its slow to react. Combined with entrenched bureaucracy that has rusted the tiller so it fights you whenever you want to make a turn. In the end what would be best for GM is to file Chap. 11, shed the needless brands, shed the bloated dealer network, downsize and become focused, firing most of upper white collar workforce. It would be a renaissance of the US auto industry.

The wakeup call came in the late 70s...long before Katrina. So I agree with you there. This situation should have been prepared for, imo. But what's tricky is that the "when" was unforeseeable.

However, I disagree that chapter 11 would benifit GM at all. First of all, they aren't out of money, yet. They're losing money, yes....but according to Wagoner, the worst in terms of job cuts and program reshuffling is over. So they aren't yet in an ideal bankruptcy position (if there is an 'ideal' position to go bankrupt...).

If they can make it to 2010 (which the federal loans will all but guarantee) they may actually begin to turn a profit.

Anyways, you cited the 'positive' results of starting over through Capt. 11...but what you left out is what could make the biggest impact...and it's a negative one. Would you buy a car...a 5+ year 'investment', from a bankrupt company? I doubt many would; and this, imo, is the single most deadly facet to GM filing for Chap. 11. They would lose nearly every last customer they have right now. There's no coming back from that -- so they'd be restarting for nothing.

[The_Blur]

Originally Posted by Dragoneye

The wakeup call came in the late 70s...long before Katrina. So I agree with you there. This situation should have been prepared for, imo. But what's tricky is that the "when" was unforeseeable.

However, I disagree that chapter 11 would benifit GM at all. First of all, they aren't out of money, yet. They're losing money, yes....but according to Wagoner, the worst in terms of job cuts and program reshuffling is over. So they aren't yet in an ideal bankruptcy position (if there is an 'ideal' position to go bankrupt...).

If they can make it to 2010 (which the federal loans will all but guarantee) they may actually begin to turn a profit.

Anyways, you cited the 'positive' results of starting over through Capt. 11...but what you left out is what could make the biggest impact...and it's a negative one. Would you buy a car...a 5+ year 'investment', from a bankrupt company? I doubt many would; and this, imo, is the single most deadly facet to GM filing for Chap. 11. They would lose nearly every last customer they have right now. There's no coming back from that -- so they'd be restarting for nothing.

Declaring bankruptcy will make GM look bad. GM has been trying to shed the image of poor products for years and can't afford to look bad again.

[GTAHVIT]

Originally Posted by The_Blur

Basically, I'm saying that GM can't afford to spend the resources on a Z28 and that those resources will be spent when they are available and when it doesn't kill GM's environmental law-abiding production. A Z28 will exist when it doesn't significantly bring down GM's CAFE rating. This will happen when less trucks and more compacts are being produced and sold.

The thing about CAFE is that it puts a ceiling on performance, or at least a floor on fuel economy, and those restrictions will lead to less efficient cars in the future. If GM can't build a low efficiency car in 3 years, why should it develop one now? The cost of R&D isn't at all justified. Instead, GM needs to make some bank to justify the expense of R&D on an efficient and powerful Z28. Unless it can be as efficient as it is powerful, the Z28 will hurt GM's green approach.

still thinking..... hold yer horses... Gees

[Muscle Master]

Originally Posted by camaro_corvette

One of several things that bothers me about CAFE is that it shouldn't apply for performance vehicles at all, If the damn public wants to own 550 hp monster that only gets 10 mile to gallon then GM, dodge, or ford should be allowed to supply that demand. I know politicians are mostly ignorant about cars, but they should have broken CAFE up into categories, trucks, cars, performance, etc. Because they stupidly gave a big FU to porshe. I hate CAFE, I hate it, I hate it, I hate it! some politicians just deserve a :slice:

Agreed 110%

[Zhawk]

Originally Posted by Dragoneye

The wakeup call came in the late 70s...long before Katrina. So I agree with you there. This situation should have been prepared for, imo. But what's tricky is that the "when" was unforeseeable.

I agree with you there. But, unfortunately, people in this country tend to have really short memories. After the oil started shipping again, people went right back to what they had been doing. We should have started creating a comprehensive energy plan at that moment (if not before). Too bad we still don't have one. Until we do, we'll be subject to artificial emergencies as well as short term problems ranging from a tin pot dictator in Venezuela, to a hurricane, to someone sneezing in a board room.
Much of the shortage in the southeast (sorry, mega, I had not yet seen the news of the price gouging down there when I posted, more on that later) is caused not by an oil shortage but a shortage of refineries and production within our own borders. When was the last time an oil refinery was built? Anyone? Anyone? And people expected the outdated plants to keep up with normal demand, let alone emergencies?

Now, about those prices in the southeast, that is not normal market forces at work. It is simple greed, shortsightedness, and price gouging. There will be a backlash about those prices. And that is not acroos the entire US. In fact, I saw a couple of places that LOWERED priced on my way home from work this morning.
I am perfectly fine with market forces setting prices, but there are somethings to note that have interfered with market forces when it comes to oil, gas, and energy as a whole. Most noteably, extreme environmentalism. I don't mean the environmentalism that means being a good steward to the Earth, I mean the no logging, no drilling, no new refineries, no nuclear political garbage that has kept this country from either being energy self-sufficient or dang near it! Everytime I see something about setting up a plant or system to create more energy, some whackjob is out to kill it and can usually convince enough sheeple to believe him/her. Example, there was supposed to be a wind farm set up in the Olympic Mountains here in Washington. Now, wind power is environmentaly friendly, right? And there is plently of wind up in that range. So, it should be fine right? Nope, some groups got together and protested on the basis that birds will fly into the windmill blades and be killed. Hmmm, I have been to Germany where these things are ALL OVER, the blades move pretty slow. If a bird is dumb and clumsy enough to be killed by them, nature is better off without that bird.

Another thing, (yeah, I know this is long) I understand and agree that gas will eventually hit $6 a gallon on a normal market. That's inevitable. But, I am pretty sure my paycheck will go up as well. When you look at year adjusted prices, gas isn't all that horrible. Heck, I remember gas under a buck and I am not THAT old. And since the price of everything is going to rise, it is not unreasonable to believe that as gas prices eventually reach that level, the effect on SUV owners won't be that much.
Now, if prices weer forced to jump to $6 across the US and stay there within, say 1 month of now. Then, we would have a the effects I stated in an earlier post (and that is what it looked like you were advocating, mega, sorry if I misunderstood you-long night on the flightline)

[mega]

Regular unleaded gasoline is nearing 6 $ a gallon in Tallahassee


Regular unleaded gasoline is selling for $5.49 a gallon in the state capital

http://www.news-press.com/apps/pbcs..../80912013/1075


it is 4.40 for premium here in atlanta, that's how much I had to pay for my 135i

[Zhawk]

Originally Posted by mega

Regular unleaded gasoline is nearing 6 $ a gallon in Tallahassee


Regular unleaded gasoline is selling for $5.49 a gallon in the state capital

http://www.news-press.com/apps/pbcs..../80912013/1075


it is 4.40 for premium here in atlanta, that's how much I had to pay for my 135i

Yep, price gouging is alive and well in the southeast and if its not gouging then how come gas is around $3.67 in southwest Florida (as stated in the article) and more than $5 in Tallahassee. I find it hard to believe that the wholesalers are soley responsible for that. The areas are way to close to each other.