R.I.P Pontiac

Much of what Detroit has built for the past 40 years is mostly what the government wants it to build. In spite of CAFE, the US car makers made the most profit from bigger, stronger, and faster vehicles. They were actually using the profits from the big vehicles to underwrite the costs of the little shitboxes that they were forced to build and which they sold virtually below cost. If the US auto buyers wanted a shoe box on a roller skate, the companies would make one. Even traditional foreign shitbox makers were building bigger, stronger, and faster vehicles for the U.S. market.

The present downturn in the economy is hurting all car companies, not only those in Detroit. If you remember, we suffered huge damage to our oil transport and refining capacity by three huge hurricanes in three years. Then you had China and various speculators driving up the price of oil on the international markets while OPEC controls production. The result was that the price of gasoline skyrocketed last summer. This caused U.S. customers to once again begin buying high mileage shitboxes, if only for the short term, before they resumed buying big vehicles once the price of gas dropped late in 2008. The US car companies make almost no profit from the little cars; they were still in a financial hole. Then the economic downturn occurred, compounded by the government throwing gasoline instead of water on that fire.