GM Cuts Production Of Small Cars As Cheap Gas Lures Customers To Gas Guzzlers

The unfortunate thing about these low gas prices is the cascade effect:

(1) Low and falling gas prices motivate consumers to get what they *really* want (a bigger vehicle, which happens to be less fuel-efficient)

(2) Manufacturers shift production from smaller, fuel-efficient vehicles to larger, less efficient vehicles.

(3) As prices continue to stay low, short-sighted manufacturers pay less attention, research, and development to fuel efficiency because of low consumer demand in this area. Large gas-guzzlers are the hot sellers of the day.

(4) Eventually, after a few years, gas prices shoot up to their previously high levels, possibly even surpassing them. People with large, gas-sucking vehicles cry about how much they're hurting at the pump. Short-sighted (American) manufacturers are caught with their pants down because now they're a few years behind the competition in terms of fuel economy.

(5) With high gas prices, American consumers return to buying smaller (or perhaps mid-size), more fuel-efficient vehicles, but because American automakers have shifted their focus away from this segment a few years ago, their offerings are much less compelling than the competition, and their supply is meager because of recently low demand. The sales shift to European and Asian automakers because they were accustomed to relatively higher gas prices than those in the U.S., and they never stopped research, development, and manufacturing of smaller, fuel-efficient vehicles. They're ahead of the game and well positioned for the changing landscape.

(6) American automakers cry that foreign automakers have an unfair advantage. Domestic sales are low. Profits fall through the floor. OMG, we need sanctions against foreign automakers to level the playing field, or tax breaks for large, domestic gas-guzzlers, or financial aid to the U.S. auto industry. We need to save American jobs and the US economy itself. The Feds throw a pile of money at the U.S. automakers who planned poorly, and they send the bill to the taxpayer (as we've seen before).


Keep this posting for future reference. I'll happily eat crow if I'm wrong. I'd much rather be wrong about this than see citizens go still deeper in debt on behalf of short-sighted and poorly run U.S. automakers.

Hello GM, remember you did that same stupid thing in the 70's and 00's both times you got caught with your pants down as gas jumped

@joescuba This is NOT even remotely the same. They are NOT killing the Sonic and the Verano. Intelligently, they are reducing production to keep from having excess stock that they have to then sell at blistering losses. They are responding to the market responsibly. Only the unintelligent cannot see that.

When gas jumps, they can ramp up the Sonic and Verano.

IT'S THAT SIMPLE!

RIP Volt

You produce what sells and you reduce what does not. That's being responsive to the market.