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It's the Market, Stupid

January 30, 2005

In spite of my criticism of the auto industry for its banking business models, there's some good going on in the auto business, too. With one eye studying for an exam, and the other eye flipping through the boob tube channels, I came across an interesting interview. The local PBS show I love to watch, Autoline Detroit, had as its guest Dieter Zetsche, on the Board of Management DaimlerChrysler, and CEO and President of the Chrysler Group. (This interview will be uploaded for viewing soon.)

Now I find Zetsche fascinating, if not brilliant at times. The German who invaded Detroit (as some of those will tell you) has brought some common sense to Chrysler, which is, I think, operating on the most sound business model of all the Detroit 3. On the show, the panel on hand (mostly local automotive writers) got right to questioning Zetsche about the usual, media favorite: the politically correct hybrid. Why are GM and DaimlerChrysler behind everyone else in the production thereof? Ask a silly question, get a silly answer. Said Zetsche: "there's not much of a market for them," and, in addition, how dare him say that "they don't add to the bottom line." Give that man a cigar! (Though he can probably afford his own Cubans.)

The auto industry has only knuckled to the hybrid movement to keep 'em all quiet while the car companies go about the business of trying to make money.

As it stands, virtually no one wants hybrids, and, they are entirely inefficient for nearly all consumers of automobiles. As Zetsche remarked, they are only usable and efficient under the conditions of close-quartered, urban traffic with heavy road snarls. Virtually no normal, rural or suburban commuter in America can make use of these battery-laden, ultra-hybrids that the Hollywood crowd likes to use for photo-ops before they go home and jump in the Ferrari for a cruise up the coast.

As Dieter also remarked, diesels are the way to go in a sense. Considering the current technology available, and the market demand, the hybrid idea is a long way from being an efficient diversion of resources for the auto manufacturers, even with the Feds subsidizing the purchase of one.

Of course, DaimlerChrysler caught heck at last week's auto show for its dual-hemi jeep. "We haven't forgotten, nor will we ever forget, what makes a Jeep a Jeep," said Chrysler CEO Dieter Zetsche, standing next to the open-top monster at the 2005 North American International Auto Show.

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