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General Motors announced Monday that it would fire more than 14,000 management workers and factories and shut down seven factories, including four in the United States, with the company virtually ceasing to produce cars for US drivers.
This partly reflects a new institutional conservatism in Detroit after the 2011 bailout, a willingness to operate only in areas with higher margins in case things get worse. "We are taking these steps while the economy is strong," Mary Barra, CEO, told Bloomberg. This decline comes in the wake of a corporate tax cut imposed by the Republicans, which insisted on encouraging companies like GM to invest. Instead, the automaker will discontinue North American production of the Chevrolet Cruze, Volt and Impala, as well as Buick LaCrosse and Cadillac CT6.
This shows in part GM's interest in autonomous and electric vehicles, areas in which the company will continue to invest.
But it's mostly to respond to the emerging love of Americans for vans and SUVs. This has been a problem for GM in particular, as wrote Monday my colleague Matt Zeitlin:
Cruze's fourth-quarter shipments fell more than 25 percent from the same quarter last year, while shipments of the Malibu Chevy dropped by more than 45 percent. In comparison, the large suburban companies Suburban and Tahoe saw their shipments increase by more than 10% and 20% respectively.
But this is a general trend in the industry: Ford announced this spring that it was all, but give up cars. Since 2014, the sales trajectories of cars and trucks have rapidly diverged. Light trucks and SUVs are now twice as expensive as cars.
This change has had a number of consequences. The proliferation of heavier and heavier vehicles (which many drivers believe to be safer, partly because they want to see over the big cars around them) has been correlated to the rising number of dead pedestrians. Collisions with the upper bumpers of SUVs tend to be fatal at a rate two to three times higher than that of cars.
He is probably also responsible for the energy efficiency gains made in the country. According to the EPA, among the 2016 models, trucks emitted on average 25% more CO2 than cars. There are a lot of factors at play here, including the complicated classification of smaller crossover SUVs and the replacement of older, dirtier cars with cleaner SUVs – read this Justin Fox column for more details – but there's more. Essential is that a period of gasoline and great consumer confidence have allowed Americans to stop worrying about fuel economy.
Things could have been different. Ten years ago, Wired proclaimed the death of the sport utility vehicle, caused by the recession and high prices of gasoline. Automakers repositioned themselves to cars, and Camry, Corolla, Civic and Accord outclassed the Ford F-150. GM stopped making Hummers in 2010. But, with falling gasoline prices and economic recovery, Congress has never seized the opportunity to raise the tax on gasoline. ; gasoline. The gas has become very, very cheap; the infrastructure was not funded; Americans have regained the appeal of bigger and bigger vehicles. At GM, the feeling is that Americans' preference for SUVs over cars is "permanent".
This is not all bad news: for now, automakers remain bound by the ambitious goals of reducing fuel consumption in the Obama era. (Although Trump is trying to undo them.) Trucks and SUVs to have got a lot cleaner. The fastest-growing segment of the market is "small SUVs" such as the Honda HR-V or the Nissan Rogue Sport, whose fuel consumption tends to be closer to that of cars than their cousins, Yukon and Suburban.
However, it did not have to happen like that. The average US car lasts nearly 12 years, which means that consumer choices lock us into a relatively gas-dependent paradigm for years to come. Low prices for gasoline have sent more Americans into SUVs; SUV drivers will be all the more reluctant to properly tax fuel consumption to account for its harmful effects on the environment. Every day, a higher tax on gasoline seems to be a better idea, and a more evasive idea.
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