Wednesday, May 26, 2010

Let's grow up - accountability for efficiency supply

I like asparagus.

When I was a kid, I didn’t like asparagus. Or broccoli. Or bok choy. Or a big salad. But, evidently, I’m not a kid anymore, because I like them all now.

When I was a kid, I wanted breakfast cereals full of sugar and food coloring. However, Mother usually made oatmeal. When I was a kid, I’d rather eat candy than healthy food. My parents knew what was good for me, which was a good thing because, as a kid, I sure didn’t. My parents took the responsibility to provide what I needed, not what I wanted, because what I wanted tended to be bad for me, and I didn’t like what tended to be good for me. Consumption in my house was not determined by my child-like demand for junk food - I was consuming healthier food because my parents were responsible for the supply.

So, let's talk about how the auto journalists are sheltering the OEMs. The emerging party line that is being increasingly propagated these days is “OEMs have higher efficiency offerings in their line-ups but the consumer is not buying them, so don’t blame the OEMs for lower efficiency vehicles on the road; blame the consumer for not choosing the higher efficiency vehicles.” 

That’s like saying “don’t blame parents for obese kids, because even though parents put both sugared cereals and shredded wheat in the cupboards, but the kids just eat sugar.” Of course they do – they’re kids who don’t know what’s good for them. And the parents save money buying the cheaper junk food, yet in the long run the damage caused to their kids, and the social costs of an unhealthy population, far exceeds the relative meagre savings of buying the junk cereal instead of better foods.

Have they really made efficiency attractive?
Take any OEM and look real hard at their lineup. Notice how the fuel efficient vehicles are generally limited to the lower models with fewer options? Why would any average consumer choose to spend more money on any higher efficiency vehicle that also has the least amount of comforts and options? Honda, the first OEM to offer a hybrid, currently makes a hybrid Insight and a hybrid Civic, but they are both small cars. If you have three children and need a larger people-mover, you’ve got to go up to an Accord or a CR-V or a Pilot or an Odyssey; Accord hybrid doesn’t exist anymore, and none of the larger models have hybrid options at all. This isn't to slam Honda, it's just an observation of their current line-up - it is what it is, and consumers have the right to look at it for what it is.

But wait, there’s more. In addition to being the first hybrid maker, Honda is also the first Japanese company to introduce a near-luxury brand, Acura. Look at their Acura lineup – not one single hybrid option. How can the consumer be blamed for choosing less efficient vehicles when a pioneering OEM like Honda doesn't even offer the option in larger vehicles or in their near-luxury vehicles?

Let's look further still. Honda boasts the greenest fleet of any OEM. Honda uses cylinder deactivation in its larger vehicles, and other advanced technologies for efficient burning of fuel. Anyone who’s driven a Civic knows that getting 800km from a 50L tank is doable. They already offer good fuel economy, which is in part why the Civic is the number one selling vehicle in Canada for the last 11 years. Honda has two of the best-selling models in auto history (Civic and Accord). People the world over choose Honda, people trust Honda, people like Honda (Accord is currently sold in more markets worldwide than any other model in the industry).
If this is the case, on what basis can anyone fear that the consumer does not want efficiency? People want efficiency, but they also want a package that meets their lifestyle needs, and if OEMs put higher efficiency technology into packages that fit consumer lifestyles, they’d sell them.

Which comes first, supply or demand?
We can still look closer at this. There was a time when the only 16-valve engine Honda offered was in the Prelude Special Edition. By 1990, all Honda engines were multi-valve engines. Did the consumer say “we don’t want multi-valve engines, we’re going to stop buying Honda vehicles”? No, of course not. Honda decided that their engines were going to be multi-valve, and that was that. And consumers kept buying.

Nissan has followed a nearly similar approach. These days, you can buy “CVT” transmissions in many Nissan products. Most people can’t explain what a CVT is. Why do they buy Nissan vehicles with the CVT engine? Because they like Nissan - simple as that. When they buy the vehicle they want and it happens to come in CVT only, they’re buying a CVT and are often none the wiser. In a model that has options, some consumers will ask the salesperson, “what’s the CVT option?” and the sales person will likely say something like “it makes shifting much smoother and is also more fuel efficient because the transmission is always spinning at optimum RPM”, to which the consumer would likely reply “oh, cool, sounds good to me.”
VW/Audi makes diesel an option across almost their entire line up.

Subaru has too. Subaru vehicles are all-wheel drive. People buying Subaru tend to either know that before buying, or come to be educated about it by the time they're ready to buy. Subaru said "this is what we do, this is what we are." They're not going out of business because they've made that decision. And they also understand that they're probably not going to be the biggest auto maker on earth. Good for them, they understand their market share, are content with their piece of the pie, and their loyal customers identify with their brand.

If Honda decreed tomorrow that “all our engines will be hybrid engines, from the Insight right up to the Odyssey and Pilot”, would people just stop buying Honda vehicles? Of course not. Nissan is championing CVT. Subaru champions their all wheel drive system. VW champions diesel. Those who like those choices buy those brands. Loyal Honda customers would keep right on buying just as they did with multi-valve engines. As a matter of fact, chances are that most buyers wouldn’t even know the difference (ask the average Canadian to explain the difference between a normal engine and a multi-valve engine – I’ll bet the average Canadian can’t).

If the supply of new cars in Canada, across the board, was more efficient, Canadians would not stop buying cars. Supply can create demand, especially as more supply means more competition, and competition tends to put downward pressure on price.

What is "efficient"?
Let’s quit the Orwellian double-speak that “higher efficiency” must be translated as “electric-gas hybrid.” That’s as much a part of the propaganda as anything else. There are all kinds of alternatives and choices. Diesel dominates the European market (what do you know? Government can create sufficient incentive to forge the direction of the entire industry. I guess they're smarter than we are?), and diesel is a proven fuel efficient platform. There is also progress in mating a diesel engine to a battery for a diesel-electric hybrid. If a diesel-only engine on a 50L tank can achieve 1000 km between fill ups, how much more if that engine had a battery mated to it? And full electric vehicle technology has long since eclipsed the point where viability is beyond question – the challenge here is to make them more affordable to more people.

What is the key to affordability?
Have we learned nothing from the Model T? The last unit rolled off the assembly line during the Great Depression, and it remains on the top-10 list to this day. How’d Henry sell that many Model Ts? Mass production - not niche production

And that’s my point. The auto manufacturers aren’t putting their best work (technology, design, production approach) into making higher efficiency engines more affordable and more available across the board. If they did, people would buy them more. And if any OEM stepped up and said “from now on, every vehicle we make will achieve 10L/100km or lower and nothing else," people would buy them.

Is it scientifically possible for a big SUV to achieve 4L/100km? Let’s ask the question another way – if someone looking to buy a large SUV could test drive one model with a choice between an engine that burned 40L/100km and an engine that burned 4L/100km, and all the other luxuries and options remained the same, and the engine choice option cost no more, which would that person buy? Why wouldn't they buy the one that would cost less to fuel?

That’s the challenge to which the OEMs are not stepping up . Bringing down the cost is a factor of a number of matters. If the supply is opened up so that per unit costs for components can come down, more people will be able to afford them. Until they open up supply, it will remain a niche option that costs the consumer more and maintains the excuse that “consumers aren't buying efficiency.”

Who's responsible for progress?
I can’t blame a kid for eating candy when shredded wheat and salad are “also available”. I blame the parents for dumping their parental responsibility on kids who aren’t mature enough to make the healthier choice. Yes, consumers are adults, but if we’ve decided that gas-guzzling, emissions-spewing vehicles are not what’s best for our society, then it’s time the producers of the supply of less efficient vehicles are held accountable for what they’re pushing.
One of the problems in this entire discussion is that OEMs are for-profit corporations with priorities that are not aligned with socio-ecological priorities. That is an honest observation that should not be swept under the rug in any conversation about the extent to which any OEM is going to be more ecologically sound. We all need to grow up in this discussion, and I lay the most weight on the OEMs who are driving supply, are driven by profit priorities, and are too quick to throw the consumer under the bus and lay blame when it's the consumer who pays - now when buying their supply, and down the road when the consequences of our poorer choices have wrought their results on our environments.

Given this organizational reality, who manages the environments in which these for-profit corporations operate? Government. If they can do it in Europe (a much bigger market with many more independent countries to negotiate between), our lack of progress in this area is evidence of a simple lack of political will. I do not believe we're not smart enough, but maybe I'm wrong and we simply aren't. That would be easier to swallow than to argue that we are smart enough but just don't care, or aren't motivated beyond the money we see in front of our face.

Honda is heralding "blue skies for our children" - our government ought to step up and adopt that mandate for all manufacturers who sell cars in Canada. Together, government and OEMs must work together to take responsibility for more efficient supply across the board. 

Dumping the responsibility on the consumer is insulting and silly. We will follow the lead of the government and the manufacturers. We, as tax payers and consumers, pay a lot of money to make politicians and the auto industry rich - the obligation is on the government and the industry to take that money and lead in a progressive, improving trajectory.

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