Back in November 2000 I sat up and watched the early US presidential election results come in state by state.  I called it a night at about two in the morning, confident that my personal choice, Al Gore had been elected.  I awoke in the morning to a phone call with a job offer and the news that with regards to the election of the 43rd president of the USA, there really was no news.

After a month of accusations and hanging chads, to my chagrin George Bush was declared the winner.   Philosophical at the time, I thought that four years would not be long enough for too much damage to be done.  Little did I expect that after eight years in power Bush would arguably offer enough bad leadership to drive US carmakers off the road completely.

Now I’m not going to pretend that ‘Bush bashing’ is either insightful or original.  It’s become so prevalent that a whole new branch of US comedy evolved in the later part of his presidency.  Satire, an area of comedy that we Brits have long held up as the supreme proof of our intellectual superiority over our transatlantic neighbours.   The staggering incompetence of the Bush Republican party has provided satirists with whole series of material.  Their handling of 21st century motoring needs can be viewed as the overlooked embodiment of their blinkered vision.

We all know that since the late summer of 2007 we have been in the ever tightening grip of the ‘credit crunch’.  This has seen a collapse in consumption and it’s no great surprise that the two biggest purchases that we are likely to make; a house or a car, are the two that have suffered the most.  Each day sees new requests for fiscal assistance from car manufacturers and no carmaker seems to be immune to the malaise that has struck the industry. This week saw Toyota ask the Japanese government to provide them with a 200bn-yen (£1.45bn) loan to help it weather the current storm.

Toyota is the world’s largest car maker, so when they are suffering it’s fair to assume that the more flabby car brands will be feeling the pain at least as badly and probably worse.  When it comes to flabby car makers we need look no further than the US for the companies that are most out of shape.  The fact that the big three US carmakers have been desperate for government funds for the past few months is a testament to their lack of competitiveness in the global marketplace.  The fact that their CEOs travelled by private jet for their first meeting shows how little they understand the modern financial or environmental landscapes.

The US car giants have traditionally found a plentiful source of customers in their home nation, and like many Americans, haven’t felt the need to explore outside their own shores.  As a way of accessing the global marketplace without leaving their own back yard they have taken over some of the best known European marquees, such as Opel, Vauxhall and Saab, although these are now being offloaded to improve balance sheets.
 
Petrol prices are lower at US forecourts than most of the rest of the world, which has given less incentive to adopt efficient technologies and consume fuel more frugally.  US motorists are feeling the pinch as petrol prices hit the heady heights of $3 dollars a gallon at the height of oil prices last year.  Yes that’s $3 a gallon, hard to generate too much sympathy when UK drivers were suffering prices approaching £1.50 per litre at the same time!
 
Prices have now subsided back to somewhere between $1.50 and $2 at the moment though, but the prospect of high fuel costs are now in the mind of US motorists.  Fuel prices are undoubtedly one of the major factors that have led the US car makers to overlook the importance of producing efficient cars.  After all, buyers have continued to buy them as they are relatively cheap to run, regardless of how much fuel they consume.  The shock that cheap fuel is no longer guaranteed has made the US motorist reconsider their driving needs.

Another factor that helped blind US motorists, to the more frugal motoring habits being adopted by many of the worlds other motorists, was Bill Clinton’s 1997 section 197 tax break, which allowed motorists to offset up to $25,000 for small businesses, when purchasing a vehicle weighing more than 6,000 lbs.  The vehicle had to be used for work purposes to a certain extent, but this clause was easily negotiated to open up the benefit to most US drivers.

This tax break helped fuel a boom in the SUV market (Sports Utility Vehicle, or Chelsea Tractor to the UK motorist), as motorists like the comfort and perceived status that such a vehicle offers.  ‘OK’ you say, that does seem a pretty strange tax perk to introduce, but what was all that talk about Bush earlier on?  Well as the US consumer started to embrace this loophole and brought more and more SUVs, the cars got bigger and bigger, and boasted less and less miles for their petroleum buck.  With economy figures such as 16 mpg for the Cadillac Escalade or the eye watering, estimated (they don’t even care enough to provide exact figures), 11 mpg of the Hummer H2, drivers don’t get far between fuel stops.

Never one to miss an opportunity George Bush, who was now president, took action.  He proposed a change in the tax break from $25,000 up to $75,000, no that’s not a typo.  The lawmakers decided that 75 grand wasn’t a suitable size of tax perk for an inefficient gas guzzler.  They set the amount to an incredible $100,000!  Yes a hundred grand.
 
Now in the real world, the one that the non US nationals inhabit, cars need to offer better fuel figures than the Hummer’s 9mpg around town (estimated, by me), or nobody is going to buy them.  The net result of this is that the market outside the US, for US cars is miniscule.  Now as the US consumer is also skint and not buying, demand for their cars has collapsed.
 
At the same time the US government was showing its commitment to the development of fuel efficient cars.  There were tax breaks available for potential purchases of Petrol – Electric hybrids, termed as “clean fuel” vehicles.  The $2,000 tax relief was available from May 2002 and was set to last for four years, shrinking by $500 per year until stopping in 2006.  Now you don’t have to be a mathematician to work out that at it’s highest, the clean fuel tax deduction was a fiftieth of the tax break to drive an gas guzzling tank.  This gives a clear view of US priorities with Bush and his cronies at the wheel.

The big three are now trying to offload anything of value to bolster their balance sheets and are lobbying for bailout loans, but it’s hard to see any future for their cars.  The rot started under Bill Clinton was accelerated under the auspices of Bush, who arguably gave the carmakers enough rope for them to hang themselves, rather than actually tie the noose.  However surely a large part of government’s responsibility is to lead.

The Republicans and Bush have led their big car manufacturers into a dead end street and left Obama the impossible task of navigating the way out.  The industry looks to be in such bad shape that any bailout money would be better spent on a nationwide party for those on low incomes to have a good night out.  Yes the fun would be short lived but that’s just what the bailout will be, short lived, and it won’t be any fun at all.

Leave a comment

Type into the box below