It has not been a good couple of weeks for Detroit auto makers. Congress turned them away (to return to the private jets in which they arrived) until they can demonstrate how they will become viable companies, Ford CEO Alan Mulally had to face Congressional questioning of his $22 million compensation package (don't worry about him though, his salary is there to help him recover from the embarrassment) and a son of Detroit went public with his very personal conflict over helping GM hold on for another day in what was an incredibly moving piece on Huffington Post. The big three were even ridiculed on Saturday Night Live last week.
Then yesterday, a U.S. District Court in Rhode Island delivered another blow when it became the third federal court to toss out the auto industry's legal attack on California's greenhouse gas emission standards In the ruling (pdf), the judge threw the case out without ever hearing the merits, as two other District courts, in California and Vermont, had already ruled on it, despite the auto makers argument that it was in the public interest to hear the case a third time.
According to Constitutional Accountability Center, the judge noted:
Private parties litigate in order to further their own interests which, sometimes, may be contrary to the interests of the general public. Indeed, in this case, it is difficult to see what interest the public has in permitting the plaintiffs another bite of the apple in challenging regulations limiting the emission of greenhouse gases into the atmosphere. Slip. Op. at 16.
Just so we're clear, while the auto makers were in D.C. begging for money to keep them afloat, they were also spending what is likely huge sums of money on lawsuits to keep them from having to meet state emissions standards that would likely make their cars more marketable. Huh. Interesting business strategy.
This case, Lincoln Dodge, Inc et. al. v. Sullivan, filed in February of 2006, is not exactly over yet, however. A group of auto dealers are co-plaintiffs in the Rhode Island case and since they were not parties to the California and Vermont actions, the court allowed them to stay in the case for the time being.
But let's pretend for a minute that instead of fighting fuel economy and emissions standards, they embraced them. Ford's stock closed at $1.66 yesterday, General Motors at $3.56. Honda ended at $21.81 and Toyota was down 2% to $65.73. Now Toyota and Honda aren't recession proof. Both have seen a drop in U.S. sales and are cutting back on operations. And let's be honest, they also fought California on the emissions standards, in what appeared to be a rather cynical attempt to box out the competition from eating into their market place. But, they saw the writing on the wall in terms of fuel efficient cars early and staked their claim there while Detroit was making cars that sucked up gas like Amy Winehouse downing cocktails at an open bar. And even when the writing was jumping off the wall and screaming at them that people wanted smaller, more fuel efficient cars, they refused to listen, even as states like California were passing legislation that would have forced them into a better industry position, they preferred to litigate.
Congress had agreed to $25 billion in loans to the auto industry, but insisted that it be tied to creating more fuel efficient cars. Detroit shot back that they needed the money to be without strings and to their surprise, Congress said forget it.
Center for America Progress has outlined a green stimulus package which includes:
"Cash for Clunkers" rebates for older cars: Initiate a $2.5 billion annual program to purchase and scrap older, more polluting cars, in exchange for an owner agreement to acquire a more efficient vehicle or use alternative transportation.
This seems like a win for everyone, consumers, auto makers, dealers and the environment. But it only helps American auto makers if American auto makers help themselves by making more fuel efficient, low emission cars rather than fighting against them.