Lower Energy Prices Could Inspire U.S. Auto Industry Renaissance

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Robert Siegel reviews the top auto news of 2012 with Dan Neil, automotive columnist for The Wall Street Journal.


Well, enough looking forward, luxuriously or otherwise. Let's take a moment to look back at the year now ending in the U.S. auto business.

Joining us is Dan Neil, automotive columnist for The Wall Street Journal. Welcome back, Dan.

DAN NEIL: Hi, Robert.

SIEGEL: And in thinking about what happened with cars in 2012, let's start with what has been promising to be our future for years, but seemed to be taking its time getting to us: the Electric Car. Is it finally out of first gear?

NEIL: No, or another metaphor is that Christmas isn't coming for the electric car - not quite yet, anyway. The sales have gone up from about 17.5 in 2011 to about 50,000 in 2012. But that represents probably a tripling of the product offerings. There's a Prius plug-in hybrid. There's a Focus EV. There's a Honda Fit EV. Anyway, a lot more things with plugs but the customers are not showing up in droves, not yet.

SIEGEL: Now, more broadly, you could say that in 2012, even the November election was as much about cars as it was about houses, let's say.

NEIL: Yeah, it was a year when the auto industry was in the news a lot. I think it's fair to say that the presidential election turned on the greater Midwest, where the bailout of GM and Chrysler did the most good. And the fact that those companies have come back so strongly is, you know, it's an argument for interventionism. It's really hard to, you know, refute.

And then, finally the Romney team put out this ad in Ohio about the Chrysler moving jobs to China, which was patently false and easily provably so. And that brought out the rank and file. I think it made a big difference.

SIEGEL: Do you feel nowadays that you're covering a U.S. auto industry that actually is, to the extent of things are here to stay, it's not just being floated with some help for a couple of more years?

NEIL: Well, I think that it's a smaller and the big haircut that it got in the past several years was badly needed. I also look forward to the fact that U.S. energy prices are going to go down a lot in the next few years, and this is going to make the car industry much more competitive, vis-a-vis global competitors, including China. And I think we're going to see a little bit of a renaissance in the U.S. car business.

SIEGEL: You're speaking now of the energy cost of manufacturing and assembling automobiles, not the cost of running them.

NEIL: That's right but it was another pivotal year for the cost of operating cars, too. You know, the Obama administration signed this deal with the automakers: 54.5 miles per gallon by 2025. That's a huge, daunting standard and it really will change the way we get around in the next 10 years.

SIEGEL: So as a taxpayer, Dan, should I be happy to hear that Uncle Sam is going to sell off your GM stock and mine?

NEIL: I'm glad you brought that up because I'm also stockholder and, frankly, I think GM has got a little more headroom in this stock price. And I think they should hold on to the stock and try and make the taxpayer whole. As it is, if they sell in the next 12 to 15 months at expected prices, the taxpayers will come out about $12 billion behind.

But, you know, that said, I mean, it's way better than the loss of tax revenue on the federal, state and local level, had GM and Chrysler been liquidated.

Anyway, I say stay on the table all in, trying to make a taxpayer whole. But I think, you know, they're kind of sick of the whole government motors thing.

SIEGEL: And I'm just curious, simply from a design standpoint or a fuel standpoint, is there a car out there that has really surprised you this past year?

NEIL: The car that blew my mind is called the Pagani Wira. The name is an Argentinean wind god. It is 700 horsepower, 3100 pounds, $1.2 million. And it flies along the surface of the road, with four wings that adjusts to vary its pitch and its aero balance. It's the damnedest thing I have ever seen and it changed my life.

SIEGEL: Is it legal to drive?


NEIL: It is. Luckily for us, they have homologated it for the U.S. market. And now you can have one and I'd like to see you pull up to NPR in the Pagani Wira. That would probably be kind of cool.

SIEGEL: It's like commuting in a hovercraft, is that what you're describing?

NEIL: Yeah, in a spaceship. It really is. It is like a time machine. Oh, and by the way, it's loud as perdition itself. So, you know, your neighbors are going to love you.


SIEGEL: Daniel, thanks for talking with us.

NEIL: Thank you, Robert.

SIEGEL: That's Dan Neil, who is automotive columnist for The Wall Street Journal, talking with us about some developments in the auto business, in the year just coming to an end.

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