There has been a common narrative about the failing car industry:  The Big Three are failing because they have not made more fuel efficient cars.  You hear this narrative repeated in news reports, you hear it senate hearing, and you hear it screamed by the blogosphere, but is it true?  The Chevy Malibu gets 30 mpg, the Toyota Camry gets about 30 mpg and the Honda Accord gets about 30 mpg.  In fact I was driving around in a National Guard Chevy Impala all over the state doing military business and I got 34 mpg ALL WEEK in that larger car!

The call is for the Big Three to offer more hybrids, but although no specific numbers are known, Toyota is thought to LOSE money on every single Prius sold!  Is this the magic formula for bringing the Big Three back to profitability?  Selling cars at a loss?  This sounds like a recipe for AMTRAK part II.  Will the car “czar” be approving designs as they come off the drafting board?  Will congress members take up clay modeling?  Maybe there will be a special commission to get rid of that goofy piece of chrome on the front fender of the new Ford Focus? (Ok, I can go along with this one)

The fact is that Toyota’s and Honda’s sales numbers are down nearly as much as the domestic automakers, but these companies do not have the debilitating legacy cost of UAW workers and their car plants are heavily subsidized by the southern states in which they reside in the form of tax breaks and incentives.  This puts them in a much better position to weather the downturn that is more a function of the credit crisis than it is gas prices or car design.  The UAW is substantially out of line with the wages of any other industry in the United States.  When the sales go down, the Big Three still have to keep paying workers for not working and retirement benefits that are second to none!

I am all about buying great gas mileage hatchbacks (this is a personal choice) but the big three have to sell a full size explorer to actually make a profit on a car considering their labor environment.  Is it any wonder that these are the vehicles that they have focused on for the past 10 years?  Have the “evil” car companies forced us to buy SUV’s?  People have been buying these SUVs for 10 years and car companies actually make a profit when they sell one.  The gas price surge of the past 3 years has hurt these sales, but with gas going back down, is there any doubt that Americans will go back to big vehicles?  I love my Ford Explorer for its utility, safety and reliability and now that I can fill the tank for $35 instead of $80, I love it all the more!

Let’s just call this bail out what it is.  It is, or should be, a short term lift for the companies until the economy starts to turn around again and the money starts flowing through the credit market again. If a car “czar” does anything, they should help the car companies achieve parity with other car makers in the area of labor.