New York Times contributor blogs about cars and other interesting ways of getting around.
Rush is wrong (about General Motors)
IT'S INTERNATIONAL: The Volt is hitting Europe as the Ampera, and China is the next world to conquer. (Photo: amcgore/Flickr)
- No automaker can ignore China. Not only has the Chinese auto market surpassed that of the U.S., but General Motors sells more cars there than here. The Chinese bought 2.35 million GM vehicles last year. The Chinese market grew 45 percent just between 2008 and 2010, and its sales of 13.6 million in 2009 eclipsed the 10.4 million sold in the U.S. I mentioned GM to a Chinese friend, and she looked blank until I said the word “Buick.” Then she was excited. “Everybody loves Buick in China,” she said. Without Chinese sales, Buick would have gone the way of Pontiac and Saturn. Is it necessary to explain to Limbaugh that the auto industry is international these days, and no car company sells only to domestic buyers?
- GM is in payback mode. Here’s Limbaugh: “Professional subsidy-sucking General Motors, which seems content to marinate in its taxpayer ‘investment’ indefinitely, is getting ambitious. No, not in the sense of paying back the $50 billion U.S. government bailout…” But as Reuters wrote in 2010, “GM completed the repayment of its loans from the U.S. and Canadian governments by paying the outstanding balances of $4.7 billion and $1.1 billion respectively.” Now I know it’s more complicated than that sentence suggests. GM paid back the relatively small direct loan, but it’s still Government Motors because we took a 60.8 percent stake in the company; that will be paid back when the company goes public (again). GM is motivated to get the government off its back. There’s a reason candidates, especially Mitt Romney, are backpedaling on their opposition to the government investment: because this was a successful bailout. Both GM and Chrysler are recovering, selling cars again, and supporting a vast network of suppliers that would have gone belly-up otherwise.
- The Volt is not failing. Limbaugh said that the Volt’s sales “have been a dud in the U.S.” But surely Rush knows that the car is extremely production-limited right now. The line shut down for four weeks beginning in June for retooling and to increase production capacity. As The Detroit Bureau described it, “Already in tight supply, the number of Volts available for delivery to retail customers will be further restricted before production resumes.” At that time, the company could produce only 16,000 Volts per year, though it’s escalating next year to 60,000. That’s why the breathless month-by-month account of Volt and Leaf numbers is a bit beside the point. We have not yet reached the point where actual Volt sales have anything to do with demand. If it fails then, Limbaugh would have a point.
- The Volt is not going to be subsidized in China. Here's where Rush gets it — at most — half right. The Chinese subsidies include $8,785 off the price of a battery car and about $7,320 off plug-in hybrids — they can add up to $19,300 per car. Obviously, GM would do better if it could latch on to that money and help the expensive-to-build (up to $40,000) Volt be competitive in China. The $7,500 U.S. income tax credit applies to cars made anywhere —the U.S., Germany, Japan, even China if it starts building crash-worthy cars. But China’s pretty xenophobic, and according to an account in the New York Times that undoubtedly set off Rush's blast of air, it wants to subsidize only Chinese cars. And as the price for a foreign brand's access to the subsidies, the Times reports “heavy pressure” on GM to share its Volt technology with what Limbaugh calls “ChiCom auto manufacturers.” Handing over those American trade secrets is a terrible idea, and GM would understandably balk at it. Chinese industries are notorious for stealing intellectual property, and it’s easy to imagine whole fleets of Chinese-made Volt clones not only on domestic roads but exported. It's hard to know what goes on behind closed doors, but GM is denying that it was ever put on the spot. A GM spokesperson, Dana Hart, told Automotive News China, “As such, there is no local content requirement and no pressure from the government to transfer any Volt technology.” And Rob Peterson, a Volt spokesman, not only denies firmly that there was any pressure on GM, but he also says the company isn't even going to seek the subsidies. "We will launch in China, and we realize we're not eligible for the $19,000 in credits," he said. Of course, Peterson added, the Volt may someday be built in China, and then, you bet, the company will be lining up for government subsidies.
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