The Obama administration’s candid “viability assessments” of GM and Chrysler emphasize one unsurprising but unfortunate theme: Both auto companies have contributed to their own financial demise by relying on gas-guzzling trucks and SUVs instead of cultivating more fuel-efficient cars.
Here’s the relevant excerpt from GM’s White House status report:
GM earns a disproportionate share of its profits from high-margin trucks and SUVs and is thus vulnerable to energy cost-driven shifts in consumer demand. For example, of its top 20 profit contributors in 2008, only nine were cars.
And the administration’s take on Chrysler was even more grim:
Chrysler’s product strength is in the pickup, SUV, and minivan segments – all of which are relatively low in fuel efficiency. On a standalone basis, Chrysler will struggle to comply with increasing fuel efficiency standards, and it may even have to restrict the sale of certain models to make sure it is in accordance with proposed standards.
Meanwhile, GM and Chrysler spent more than $3 million each on lobbying during the fourth quarter of last year — and part of that money went towards beating back efforts to increase fuel-efficiency standards.
It was on George W. Bush’s watch that automakers were allowed to lobby themselves into the ground by opposing stronger emissions limits (and filing lawsuits to block state-level emissions measures), but lobbying restrictions have not yet been formally placed on GM or Chrysler. Although the administration vowed in January to restrict lobbying at companies that receive government bailouts, The Hill reported last week that the Treasury Department is delaying the actual release of those regulations.
