Telecommuting
Today’s economy is seeing urban populations expand, and a new-age workforce that is able to telecommute. Daniel Yergen, author of The Prize, reported that the US now uses half as much energy per unit of GDP as it did in the 1970s. Granted, part of this is due to the fact that we have outsourced energy-intensive industries like manufacturing overseas. But the other part is the efficiency of today’s vehicles, as well as Americans traveling less.
The advantages of telecommuting are numerous. You have the lower gas bill, less wear and tear, fewer oil changes, and fewer tires purchased. This all adds a lot to a consumer’s pocket, not to mention the lower insurance premiums due to fewer miles driven. Not every job can enjoy this luxury, but employers and employees can both benefit from it.
Car ages
The average car today is more than 10 years old. The average new car has a warranty lasting longer than previous vehicle models could ever dream of operating. As Americans travel less, we will see the average car age increase because of their increased quality and decreased use. The addition of high-quality plastics decreases body rust and keeps a car looking like new longer, and computerized manufacturing is able to measure and cut steel better than humans ever could by hand.
Ford Motor Company (NYSE:F) has a profit margin of 4.7%, which is on par with the industry average of 4.1% operating margins. As the other US manufacturers buckled under bankruptcy, Ford Motor Company (NYSE:F) was able to weather the storm through asset sales and cost-cutting initiatives. This has led Ford to be slightly ahead of the curve during the recovery, as the Dearborn-based company rolled out new models while everyone else played catch-up.
This gave Ford Motor Company (NYSE:F) a great leg up, and its new model cycle was perfectly timed to get people to reconsider the Ford Motor Company (NYSE:F) lineup. Since these cars are built to last much longer than their predecessors, these customers will not be in the car market for a number of years.
Government support
The US government stepped in to save General Motors Company (NYSE:GM) and Chrysler during the financial crisis because it saw those companies as necessary manufacturing bases in the country, as well as businesses that supported a huge numbers of retirees. The US is not the only government to prop up their auto industry; Sweden stepped in to try and save Volvo while trying to catch the falling knife that was Saab.
General Motors Company (NYSE:GM) ultimately declared bankruptcy, and re-emerged as a partially state-owned entity given the nick name “Government Motors.” During the economic recovery, GM was able to produce smaller and more innovative cars like the Chevy Volt, and gear away from its once bread and butter SUVs. The new GM now has net profit margins of 2.8%, but is in a much better position financially than it would have otherwise been, if it would still even exist.
General Motors Company (NYSE:GM)’s push into the electric market brought a novel idea to the masses by having a car that runs on batteries but also with a gas backup generator for longer trips. This car was named the Volt and removed the “range anxiety” that electric car owners face.
The Volt was seen by some as a failure on General Motors Company (NYSE:GM)’s part, since $39,000 is a bit outlandish for a compact Chevy, and it has been speculated that GM breaks even on the Volt, at best.
