On Sat, 29 Nov 2008 12:06:47 -0500, Joseph Gwinn
wrote:

Holman Jenkins asks a very good question: Why is it that the Big Three
automakers can make cars profitably everywhere in the world but the US?

http://online.wsj.com/article/SB122765959966358461.html

The Wall Street Journal, 28 November 2008.

Joe Gwinn
--------------
Everything but the real problem is discussed.

In point of fact, every man, woman and child in the US now
owns/registers slightly more than one vehicle [1.05], a vehicle
being a car or light truck, not counting motorcycles/scooters.

You can see the estimated 2007 per capita car and truck ownership
by state at http://www.swivel.com/data_sets/spreadsheet/1003554
I have sorted and analyzed this data and would be pleased to
supply you a copy in M/S xls format.

Several points:

(1) To put it bluntly, THE REASON DETROIT AND THE TRANSPLANT
CAR COMPANIES CAN'T SELL MORE VEHICLES IN THE UNITED STATES IS
BECAUSE WE ALREADY HAVE MORE VEHICLES THAN WE NEED. Individuals
and families in highly congested urban areas (with higher
incomes) such as New Jersey, New York, and Washington D.C. don't
have [multiple] vehicles because these are not particularly
useful. ==It would make just as much sense to "rescue"
agriculture by attempting to get everyone to eat more.==

(2) From an aggregated point of view, the United States now
has 1.05 vehicles, defined as a car or light truck, per person.
(Families have multiple vehicles.) The highest per capita vehicle
ownership is Wyoming with 1.824 vehicles per capita. 37 of the
states have at least on vehicle PER PERSON. The minimum vehicle
ownership areas are New Jersey (0.718 vehicles per person), New
York (0.575 vehicles per person) and D.C. (0.485 vehicles per
person)

(3) A simple 1st degree LSBF regression indicates
Y= A + B*X
N A B R R^2
51 1.418745075 -7.84595E-06 0.31425843 0.098758361


(4) NOTE THAT THE MINUS SIGN FOR THE B TERM IS NEGATIVE,
INDICATING THAT AS THE PER CAPITA INCOME INCREASES, THE PER
CAPITAL VEHICLE OWNERSHIP GOES DOWN. From this data, it appears
that having a place to park a vehicle is the most important
factor in multiple vehicle ownership, followed by the perceived
utility, with the level of income a relatively minor (even
negative) factor, i.e. the higher the income, the *LOWER* the
vehicle ownership.

(5) THUS IT IS FUTILE TO ATTEMPT TO "RESCUE" THE AUTOMOTIVE
INDUSTRY FROM ITSELF, BY INCREASING SALES, AS THIS IS NOT
SUSTAINABLE, AND IS A DIVERSION OF CRITICALLY NEEDED CAPITAL.

(6) Before Congress reconvenes to debate the "rescue" of the
domestic automotive industry, it is critical that at least a
preliminary estimate of the number of new vehicles that are
actually needed, AND CAN BE SOLD WITHOUT DISCOUNTS, REBATES AND
SPECIAL ZERO INTEREST FINANCE PACKAGES, be obtained. It is clear
that we have entirely too much domestic production capacity, and
any attempt to preserve this overcapacity is foredoomed to
failure. Imports simply exacerbate this domestic overcapacity
problem.

(7) On a macro economic basis, it will be counterproductive to
attempt to force people to dispose of their existing vehicles by
legislation prohibiting the registration and/or general use of
older vehicles, as again this is the diversion of increasingly
scarce capital to operationally non-productive uses. E.G. if a
"beater" is adequate for a work car, what is gained by forcing
its owner to replace it with a new[er] car, with higher taxes,
license fees, insurance, etc, simply to "rescue" Detroit?


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).