Summary. Over the past ten to fifteen years, consumers have loudly spoken by purchasing smaller more efficient cars. During that same time period, numerous reports, studies, focus groups, and research projects all provided the same conclusive and incontrovertible advice: small cars are the wave of the future. This is a Small Car Society report on the decline of large vehicle manufacturers.
Good Policy. Companies like Honda and Toyota listened to consumers and responded to the needs and demands of the marketplace as well as the needs of our environment.
Poor Policy. Companies like For and General Motors were generally less responsive to the needs and demands of consumers and the environment.
Predictable Outcome. As a result, not surprisingly Honda and Toyota have done well financially while Ford and General Motors continue to be declining.
Correction Needed. This kind of behavior pattern among some automotive companies, of ignoring consumers and the environment, is not something a quick bailout will fix. For example, if an obese person has liposuction to remove fat, and then goes back to the same pattern of consumption and habits of inactivity, that person will be back in trouble again in a short period of time unless their behavior is corrected.
Strong Sell Recommendation. The Financial Resource Group in cooperation with the Small Car Society has issued a strong sell recommendation for any stocks even remotely involved in large vehicle production. Owners of larger vehicles should consider selling their vehicles as soon as possible before the bottom drops out of the market and the selling price declines sharply. According to Small Car Society Director, Gregory Johnson, “Unless your large vehicle is actually needed, and used daily for a long-term practical use, we would suggest that you sell it. Use the best tool for the job, and the best car for your actual transportation needs.”
Video Explanation. Below is a thoughtful video presentation by Al Gore regarding why small efficient cars are in demand.
Stock Price Value Charting. From a quick look at the stock value for Ford, General Motors, Honda, and Toyota during the time when small cars have become more popular, it’s easy to see how the stubborn refusal to build small cars has financially harmed the U.S. automotive industry (see charts below).
Members of the Small Car Society have been petitioning U.S. auto manufacturers for years, requesting smaller vehicles. Had U.S. auto manufacturers responded, they could have averted an economic crisis and financial harm to our national economy. They chose not to listen. Ford’s stock value has steadily declined from being almost $40 per share to now being about $6 per share. General Motors stock was worth about $80 per share and now it is worth about 85 cents per share. Companies like Honda and Toyota that listened to our advice have had seen significant increases in their stock value.
Government Funding of Failing Corporations. Because the downward financial spiral of General Motors is largely due to consumer dissatisfaction with their huge vehicles, it’s not surprising that there has been a public outcry about government funding to support the failing corporation. Below is an example of the public response (courtesy Despair.com).