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Honestly, One of the Dumbest Posts I Have Ever Read

July 31, 2008

[This is not related to real estate in any way.]

Sometimes, you read something written by otherwise intelligent-seeming people that makes you wonder what the hell happened to rationality.  This is one of those somethings:

It is not just that the big three ignored the future. From where I stand, they also seem to have attempted to hold the US government back from doing anything about it. All three have spent millions lobbying to delay laws that would have made improvements in the fuel efficiency of new cars mandatory. While global competitors Toyota and VW responded to market needs by introducing smaller, lower-emission models, the big three seem to have preferred to spend their time and money preventing the government from forcing them to do the same.

W. T. F.? o.0

So let me get this straight.  The writer loves Toyota and VW because they responded to market needs.  But castigates American carmakers for preventing the government from “forcing them to respond to market needs”?  Since when do companies need to be forced by governments to respond to market needs? Does the writer understand capitalism at all?

Did Toyota and VW create smaller, low-emission cars and hybrids because of CAFE standards?  No — they saw a market need, a way to tap into what they saw as pent-up consumer demand, a way to differentiate their product offerings, and they took action.  This is what companies do on a day-in, day-out basis.  Zero government action was needed to get profit-seeking businesspeople to take action.

GM, Ford and Chrysler made a mistake.  It is one that will cost them dearly.  Companies do that; fallible human being misread market signals all the time.

A marketer claiming that the government understands market needs better than a company actually participating in that market — I never thought I would see the day.

Well, apparently, all companies should just fire all their marketers and their market research teams.  They merely need to wait for the Market Needs Commissar to tell them what the people really want.


3 Comments leave one →
  1. Jon B permalink
    July 31, 2008 2:09 pm

    I think what the writer is trying to say, and what is an absolute indisputable fact, is that the Big Three have (successfully) fought tooth & nail to hinder government regulation of standards – and the time, money & energy spent on that fight would have been much better spent investing in the future.

    Fuel economy standards are in place (and they are in place throughout most of the developed world in one form or another) to require automakers to factor public interest, in this case reduced fuel consumption, in the same equation as short-term profit. That fact this this particular element of public interest is now so clearly in line with consumer demand is a surprise to no one (ask Toyota). Despite your contention to the contrary, it’s pretty clear that elements of the government (which is supposed to be a reflection of public interest) have understood the market better than these companies on this issue. And now the Big Three are paying dearly. And so will we, the US taxpayers, when one or more of these companies has to be bailed out (again).

    If only they had used that money to invest in their products…….

  2. July 31, 2008 2:59 pm

    @Jon –

    I think your rewriting of the original writer’s words is stronger and better. Sadly, that isn’t what BSI wrote.

    If his point was that the Big Three shouldn’t have wasted time lobbying the government, fine — I can agree with that.

    But however did Toyota and VW detect the market demand before being told to by the almighty state? They paid attention to the market. Frankly, The Big Three could and should have done the same thing, CAFE standards or not. In fact, the Big Three could have spent $100m more on lobbying, but still have done their homework on consumer demand and not be in the position they’re in today.

    How do I know this?

    Well, it seems that Toyota also has been lobbying fiercely against CAFE standards. (That was dated 7/30/2007 — the Prius was brought to market in 1997.) Furthermore, apparently as of March of 2007, Toyota was planning to spend a record amount of money to lobby Congress, and create its own Political Action Committee. Apparently, Toyota also thinks the government doesn’t understand the market.

    Finally, in terms of money spent lobbying, GM spent $8.7m in 2006 (to pick just one of the Big Three). That year, GM earned $207.3 billion in revenues, which means that their lobbying expense was 0.004% of their revenues. It beggars the imagination to think that $8.7m would have made a whit of difference to GM’s investment in their products.

    There are lots of problems with the US Auto industry. I would put not being sensitive to consumer demand as one of the big ones. I just don’t think that has anything whatsoever to do with government relations. For a marketer of all people, like BSI, to draw some sort of specious connection between lack of comprehending the market and lobbying activity is just profoundly silly.


  3. August 12, 2008 1:14 pm

    Great piece and I totally agree!

    The market will reward manufacturers that are able to bring higher mileage autos that people like to the marketplace. We need to award innovation instead of getting the government involved to force this. Imagine what could be done if the millions spent on lobbying could have been spent on research and engineering to create new products that people want.

    With increased energy prices, people will demand higher efficiency and manufacturers that can have these options available will be rewarded.

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