General Motors vs Tom Friedman


As follow up to the previous broo-ha between GM and Thomas Friedman (earlier discussion here and here), Friedman has a few points to make. Again, Friedman is absolutely right: why can't GM be forward thinking about gas milage, instead of fighting to continue 'the old ways'? We'd be happy if suddenly GM dropped Dick Cheney and the Energy Task Force from their collective rolodexes, and instead subsidized the purchase of hybrid cars. Dream on, right?

Thomas Friedman: G.M. — Again

As long as G.M. is giving away $1.99 gasoline for its gas guzzlers, I will be a harsh critic.

On May 31 I wrote a column accusing General Motors of acting irresponsibly by offering unlimited gasoline at $1.99 a gallon for one year to anyone who buys certain of its midsize sedans, big S.U.V.'s or gas-guzzling Hummers in California or Florida. At a time when we are at war in the Middle East, with an enemy who is indirectly financed by our energy purchases, it seems to me that every American, and every American company, has an obligation to reduce oil consumption. No one should be making a huge gas-guzzling Hummer, and no one should be driving one, and no one — certainly not G.M. — should be subsidizing people to drive them.

After the May 31 column appeared, G.M.'s vice president for global communications, Steven J. Harris, and his colleagues denounced my argument in a formal statement and on G.M.'s corporate blog. This is an important issue, so let me respond to their response.

To begin with, I would much prefer to see G.M. thriving and growing American jobs — not selling itself off, limb by limb. But as long as G.M. is giving away $1.99 gasoline for its gas guzzlers, I will be a harsh critic. Pardon me if — at a time when China is imposing higher mileage standards than America — I don't want to join the many congressmen and senators in drinking G.M.'s Kool-Aid and not demanding that it become the most fuel-efficient automaker in the world. If more people in Washington insisted that G.M. focus on building cars that could compete in a world of $3.99 gasoline, rather than creating an artificial universe of $1.99 gasoline, G.M. would not be worrying about bankruptcy today.

G.M. says that the cars chosen for its $1.99 gas giveaway were chosen because of “their outstanding fuel economy and great consumer appeal.” It also says that G.M. makes more cars that get an E.P.A.-estimated 30 miles per gallon on the highway than any other company.

Fact: G.M. also sells more cars that get 9 to 11 m.p.g. — the Hummer — than any other company. And even though G.M. justified the $1.99 program as giving consumers a chance to drive some of its most fuel-efficient cars, it did not include its best-selling, most fuel-efficient model, the Chevy Aveo (35 m.p.g. highway), in the program, but did include seven gas-guzzling trucks. G.M. still does not have a family-friendly hybrid on the market (one is due this summer) — nine years after Toyota introduced the 45-m.p.g. Prius hybrid, which G.M. scoffed at at the time.

Stephanie Salter, a columnist writing in the Terre Haute Tribune-Star, did a spoof about G.M.'s $1.99 gas giveaway by imagining what other less-than-healthy consumer companies might now do: “Today R.J. Reynolds Corp. announced a new 'smoke more/pay less' instant rebate program for most of its cigarette brands. Time-dated coupons will be included in every pack of RJR cigarettes. Tobacco consumers who collect 10 same-brand coupons in five days can redeem them for a pack costing $1. The only brands not covered by the coupon program are the company's cigarettes with very low tar and nicotine content.”

Next, G.M.'s Harris asked: “How is offering a gas card that may be worth $1,000 any different or more sinister than the $2,000 cash rebate that Toyota's offering right now nationwide on its full-size S.U.V., the Sequoia?”

Fact: Reading that question you'd think that G.M. was giving away cheap gas instead of big S.U.V. rebates. The truth: We called G.M. dealers in California who said that under the new program they were authorized to offer $5,000 discounts on the 2006 Suburban and Tahoe S.U.V.'s — which are like the Sequoia — in addition to G.M.'s unlimited $1.99 gas for a year. I guess Mr. Harris just forgot that.

Yes, Toyota makes trucks and S.U.V.'s, just like G.M. I am not against either. Some people need them, others enjoy them. But I don't think we should be subsidizing gasoline so people who don't need them will buy them or buy the most gas-guzzling versions. G.M. says its full-size S.U.V.'s get better mileage than Toyota's. All I know is that Consumer Reports rates all size S.U.V.'s for fuel efficiency, reliability and performance. Toyota and Honda S.U.V.'s are its top picks in every size category.

Ah, says Mr. Harris, but we offer nine vehicles that can run on E85 ethanol-gas blends, and have made 1.9 million such cars and trucks. Toyota makes none. The truth: The Big Three U.S. automakers started making flex-fuel cars in the mid-1990's after they were given a shameful federal loophole.

As the Des Moines Register explained in an article on May 26: “The loophole works this way: A dual-fuel vehicle that can run on either gasoline or 85 percent ethanol, or E85, is credited with a much higher mileage rating than it really gets. That keeps the overall mileage of the cars and trucks that a company like Ford or General Motors makes in any given year within the government's mileage limits.”

By agreeing to build flex-fuel vehicles credited with phony mileage, Detroit gets to make many more bigger, heavier gas guzzlers, the paper explained, “without having to pay fines for exceeding the federal mileage standards.” For instance, the 2006 G.M.C. two-wheel-drive Yukon 1500 actually gets 15 m.p.g. city and 20 m.p.g. highway. But under this loophole it is rated as getting 33 miles per gallon for purposes of meeting the government's fleet fuel economy standards. “The Union of Concerned Scientists calculates that the loophole increased U.S. oil consumption by 80,000 barrels per day in 2005 alone,” the paper said.

If G.M., Ford and Chrysler really care about saving oil and the environment, why exploit this loophole? And by the way, even though G.M. has made 1.9 million flex-fuel vehicles, it and the other automakers for a long time did little to inform customers that their cars could run on ethanol — because their real interest was the mileage loophole to make more big cars. Most people didn't know they were driving a flex-fuel car. “Until recently, the only way to tell was by checking the vehicle identification number,” the paper noted. Recently, General Motors has put yellow gas caps on its dual-fuel vehicles to alert customers.

I'm not a car expert, so let me leave the last word to Automotive News, the industry's top trade magazine. Its June 5 editorial said: “General Motors' promotion that reimburses some buyers for gasoline purchases is ill-advised for an automaker that is trying to burnish its green image. The program should be dropped, not expanded. ... It's simply a subsidy for vehicles that burn a lot of gasoline. And it's one more example of G.M.'s tone deafness on environmental issues. ... Yes, G.M. can make vehicles that are as fuel efficient as anybody else's. But it acts as though its future depends on gas guzzlers.”

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I can hardly wait for my Prius, which I ordered a few days ago. I'm going to love thumbing my nose at gas stations as I drive by :)

Excellent! I'm jealous.

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This page contains a single entry by Seth A. published on June 14, 2006 1:00 AM.

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