The poor state that U.S. automakers have found themselves in started a while ago. Built to churn out SUVs that were in demand for the last decade, they were sideswiped by the surge in oil prices.
Now the recession that likely started this summer and is looking darker with each passing week has gas prices closing in on $3 a gallon again. But consumers aren’t likely to rush out to buy SUVs for a while because they see their 401(k)s shrinking and sense that job cuts may emerge on the horizon soon.
So the need for innovation in new, more fuel efficient (and hopefully cheaper) automobiles hasn’t changed much this tumultuous month. After all, the $25 billion loan package that Congress approved late last month, ostensibly to shore up automakers as demand dries up, was actually proposed a year ago to help them meet fuel efficiency standards.
But expectations are rising that these companies are going to – or at least should – step up their efforts to deliver green cars for the masses.Writing for the WSJ Online, Joe White wrote:
Car makers often do their best work when their backs are against the wall. The auto industry’s history is marked by design and technology breakthroughs spurred into production by a crisis that shattered status-quo strategies. The 1932 Ford was a response both to the Depression and sinking sales of the aging Model A.
GM would surely love the Chevy Volt to that historical list. But the problem is that the automakers still seem to be at sea when it comes to producing dramatically new and appealing models. If they showed us this little during the oil rally, why should we expect better now that R&D budgets are certain to be slashed?
Some hope, it seems, could lie in that $25 billion. Much of the money may be spent on retooling plants to produce new cars that better suit these changing times. Also encouraging is that the companies are more willing to team up with university research departments to explore new technologies.
U.S. automakers have so far been discouragingly slow to transition from their old ways and find new improved ones. It’s not clear that will change, but who knows? There is nothing like a ride along the edge of a maelstrom to concentrate an executive’s mind.