By Jack Baruth
Wednesday, Dec 5th, 2012 @ 12:00 pm
 

"Follow the money." That's what the secret source "Deep Throat" told Woodward and Bernstein as they attempted to uncover the truth behind the Watergate break-in. That single cryptic piece of advice led them to the information they needed. Everybody knows that, right?

There's only one tiny problem: it never happened. Mark Felt, the real "Deep Throat", never spoke that line to the intrepid pair of Washington reporters, or to anyone else. It was made up, as part of the screenplay for All The President's Men, and became a vital, memorable part of a history that never happened.

That isn't to say it isn't sound advice, however. Let's clarify it a bit, and make it "Follow the market." That is an even better piece of advice, because if you know how to follow the market you can find the obvious answers to all sorts of questions. Here's a question that could use answering: Given that the Chevrolet Volt has been a marketplace disaster and sales of the ultra slow-selling Nissan Leaf are actually trending downwards in its second sales year, what's the point of releasing the Chevrolet Spark EV? Let's follow the market and find out.

Shopping trip

Here's a central truth of the automotive business in North America: the real customer for automakers isn't the man or woman on the street. It's the dealer. Once the car is at the dealer, it is the dealer's problem. They'll sell it eventually, no matter how miserable a product it is. Check your Ford dealer for new-old-stock Pintos if you don't believe me, or ask a Nissan dealer if he has a B-210 for sale. The dealer is the customer. Repeat after me: the dealer is the customer. If a dealer won't take a car, it doesn't matter if people on the street want it. Honda builds manual-transmission four-cylinder Accords, and they could easily build 300,000 of them a year, but dealers don't want them, they don't buy them, and any "customer" trying to get one from a dealer is in for a rough ride.

This central truth is valid for pretty much every carmaker from Fiat to Ferrari. Well, Fiat and Ferrari are the same carmaker, but you get the idea, right? But when it comes to the largest automaker in the Western world, General Motors, the rules change. GM doesn't have to please the dealers. Hell, GM's been trying to kill their dealer body off by any means necessary, from shedding brands to "suggesting" that stores in overcrowded markets close their doors. They regularly flood their dealerships with unwanted stock of unpopular models while coming up short on the products that people really want. Go check your local lots for a body count on Volts, which are showroom poison, and four-cylinder GMC Terrains, which are hotter than the surface of the sun, for an illustration of this.

The rules are different for GM because GM doesn't need to follow the market. It's already failed at following the market. It's a bankrupt carmaker building products that the dealers don't want and can't sell for any kind of profit. Very few GM cars are the best cars in their respective segments. From compact car to full-size truck, the General trails the field. A hundred years ago, the Ottoman Empire was said to be "the sick man of Europe." Well, GM is the "sick man of America", and it needs continual medical intervention from the United States government to stay alive.

The government's medicine comes in all sorts of forms, from the shock paddles of the bailout to the steady morphine drip of Federal fleet purchases. All GM has to do in order to keep getting the medicine is to placate the UAW and create products that the government thinks will succeed. The problem is that the government's view of the auto market has no resemblance to reality. Those of us who live in reality know what the market wants: it's obvious to anyone who reads the lists of best-selling cars and trucks. The government's idea of the market, by contrast, is twisted by political correctness, dreams of electric sheep, and a Washington-centric idea of personal transportation.

The U.S. government, as a general rule, believes that people really want electric cars. They're wrong. Sure, the Teslas are popular with a certain group of Silicon Valley zillionaires, and the Mercedes-Benz SLS E-Cell no doubt appeals to European sophisticates, but those are electric toys, meant to be sold to people who who can afford to purchase based on novelty value. Remember, the original digital watches were high-ticket items.

Incentives

The real market wants nothing to do with electric cars, at least not until they are as cheap and free of compromises as digital watches. Can you name another product that comes with $7,500 of free tax money and still doesn't sell? What if the Toyota Camry came with a $7,500 rebate? There would be blood on the showroom floors as middle-aged women fought to the death for the privilege of dragging the last remaining beige four-cylinder LE off the lots. But the Volt sits serenely outside every Chevrolet dealership, unloved and unwanted despite the foot-deep stack of cash on the hood.

The people who run GM aren't stupid. They're frequently incompetent, but they aren't stupid. They know they aren't capable of designing a decent small car; that's why the Cruze, Sonic, and Spark are all fundamentally Daewoo designs. They also know that nobody is going to want the Spark EV, even with a government-provided 30 percent discount. There's a reason that it won't be sold nationwide. No reason putting a Spark EV on a truck all the way to Kentucky so it can sit there for a year or two. The dealers can only take so much abuse, even from GM.

The Spark EV doesn't exist to make the dealers happy. It exists to placate GM's real masters in the United States government. It exists because it fits into the Washington dream world and the men in Washington who dream those dreams hold the power of real life and death over GM. It may well be the best subcompact electric car ever sold. That's like being the best cricket player in Montana: the competition sucks and America doesn't care anyway.

You're not going to buy one. Nobody is. The Spark EV will be purchased by local governments, required by state governments, funded by the federal government. It amounts to a monstrous mandatory handover of American tax money to the South Korean portion of GM. It's a sad joke and it should have been canceled a long time ago.

The worst part of all this is that if GM didn't have to kiss the Federal rod -- if it didn't have to build Volts, and Spark EVs, and hybrid this, and XFE that --- if it could just focus on building the proper products for the real markets, it might succeed. It's unlikely, but it's possible. You can win big if you give the people what they want and give the government two middle fingers. Ask Woodward and Bernstein.