Under the radar: Some trends are obvious enough and visible to all investors. Others are more subtle, but are just as potent, and these often slip "under the radar."
Case in point: the Obama administration's new, higher, fuel-efficiency requirement for vehicles. Basically, by 2016 it will cut auto emissions by one-third while increasing the average fuel economy requirement to 39 miles per gallon for cars and 30 miles per gallon for light trucks.
The tougher standards, long-opposed by General Motors Corp. (NYSE: GM), Ford Motor Co. (NYSE: F), and Chrysler have now been embraced by the U.S. auto makers, who found it hard-pressed to deny this important and essential transportation and energy use change during a time when the federal government is bailing out the auto sector on a number of fronts (direct investment, credit market support).
But here's something investors should consider: think about where the United States would be today, had the higher mpg requirements been passed when they should have been, 30 years ago: what would the nation's annual imported oil bill be today? What would the trade deficit look like? What would gasoline consumption look like, including its impact on the price of gasoline? And most significantly, would any U.S. auto manufacturer's condition have deteriorated to the point where it needed government assistance?
It goes without saying that foreign car manufacturers, particularly Japan's Toyota Motor Co. (NYSE: TM), Nissan Motor Co., Ltd. (ADR) (NASDAQ: NSANY), Honda Motor Co., Ltd. (ADR) (NYSE: HMC), have been light-years ahead of the U.S. regarding fuel efficiency. Most analysts agree a downsized Detroit can't overtake Japan's lead in high-mpg cars, but the to-be-built, more-efficient U.S. cars and trucks will at least represent a step in the right direction for the nation, from energy-use and emissions standpoints. And if Detroit's cars catch on, the new mpg standards could spark a growth cycle in the steel, aluminum, tires, electrical components and other lateral sectors that supply the auto sector.
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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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Reader Comments (Page 1 of 1)
5-26-2009 @ 8:33PM
William A Daviau said...
The very taxes on gasoiline that Americans have so long opposed are what caused foreign car manufacturers to strive for better fuel economy.
A better fix for what ails us is to add $2.00 per gallon in fuel taxes and use the resulting funds to build a mass transit infrastructure...trains and the like.
5-26-2009 @ 9:18PM
ij70 said...
Hey Joe! Fail once again. Here is quote for you:
"There are 29 car models and 36 truck models that already achieve the new standard"
Read for yourself: http://www.autoblog.com/2009/05/22/edmunds-finds-new-cafe-standards-has-loopholes-big-enough-to-dr/
5-27-2009 @ 3:32PM
danno said...
mR. LAZZARO..yOU SIR ARE ..WITHOUT QUESTION.a typicl left wing idiot who has over ten year's preached nothing but foreign car's as america's salvation..you yourself have never driven anything that was completly made in this country..oh yea those college year's when you drove dad's car..and of course let's not forget all those pony-tailed proff's in college telling you how great ever-- thing made in the asian is..That's where you picked up your left wing view's,..do us a favor MOVE TO JAPAN AND SUPPORT THERE GOV,I AM SURE YOU WILL NEVER EXPERIENCE ANY BREAK-DOWN'S OVER THERE..
5-26-2009 @ 10:57PM
ombudweiserman said...
Had we made this change 20 or 30 years ago, we'd now look like Cuba: people nursing decades-old cars because the pieces of crap mandated/controlled by the Government were tiny pieces of junk and probably not available anyway because of logjams created by a Government-run industry.
It'll be interesting to see what this country looks like in 20-30 years. Un-bought or unavailable Pelosi-mobiles gathering dust in car lots while Americans turn their attention to learning fuel injection and car computers to keep real cars going. At least Cubans only have to worry about carburetor- and spark plug-era technology!
5-27-2009 @ 9:18AM
matt said...
I would be worried except that 2016 is far enough away that by then well forget what idiotic panic-stricken administration passed that socialistic crap and repeal it. And if not...I'm moving out of this country.
5-27-2009 @ 12:37PM
genesis68ba said...
Is that why Toyota lost over $7.5 billion dollars the first quarter of this year?
Is that why Toyota had to borrow over $28 Billion dollars from their government last year?
Is that why Nissan, who almost went bankrupt just over 2 years ago?
Come one Joe - do a little research before your write such junk. Oh and by the way, look to see which manufacturer has more vehicle that get over 30 MPG (that would be GM).