Driving Miss Crazy

Like anybody, I too am always delighted when my analysis is on the mark.

Let me explain.

A few days ago, in responding to a comment at this post, I wrote:

First, the equation of decreasing car sales with loss of employment. I would rather interpret this way: The hundreds of thousands (or lakhs) of rupees that would have been spent on cars will now be spent on other things, which will generate employment. The "loss" is primarily for those who invested in automobile manufacturing. I have no sympathies for those big investors, who know all too well about the market and profit and loss.
Second, some of us have been hypothesizing that in highly densely populated cities--which is all of India--the cost of car ownership is immense. Car sharing, which has been made possible by the likes of Uber and Ola and others, makes it possible for the upper-middle class to move around in cars without owning them.

As much as I don't care for the likes of Uber, those services are here to stay and will continue to grow.  Therefore, betting on the auto industry to sell more vehicles to a younger generation doesn't seem wise to me.  While I am no investment guru, I interact a lot with young people, and read commentaries, based on which even three years ago I wrote that teenagers perhaps don't dream of cars anymore.

Today, I read in the news that the finance minister of India is blaming millennials and services like Uber for the massive slump in the auto industry in my old country!

To which I have only one response:
Ha ha ha ha ha ha ha ha!

Source

The minister made this comment in Chennai for a good reason--it is the Detroit of India, where the auto industry is huge.  But, it is remarkably stupid for a finance minister to blame young people for not buying automobiles.  Seriously?  Is the government now going to mandate that thirty-somethings buy cars, or else?  Next they will frame it as a patriotic duty to buy cars?  Like how my President here tweets and talks about "Patriot Farmers" who are being screwed by his trade wars?

A year ago, when I was in India, an old high school classmate suggested that I use Uber or Ola.  He, like me, is no millennial.  And is a highly affluent fellow.  Even he regularly uses Uber to get to work, he said--better than hiring a driver, and far better than "self-driving."  Another advantage?  He could talk without distractions while on the road--he was, in fact, in an Uber ride when he made that suggestion to me.

I tell ya, if only people listened to me and my analysis of how the world works! ;)

Hyundai and Foxconn buses. Near Chennai, not in China

"I will be back in a minute, sir" the autorickshaw driver, "L," said as he stopped the vehicle in the shade. 

Right from the first minute of the drive, I engaged him in conversations--in Tamil, of course--about Kanchipuram and other topics.

The first question I had for him was whether the name on the vehicle, "S," was his.  "No, sir, it is my son's."  Which is also when he told me his name was "L."

I would never have guessed that he was a father of a kid; he seemed way too young for fatherhood.  I suppose this is better than the Tony Randall route to becoming a father at an age when quite a few would have become great-grandfathers!

"L" drove me from one old temple to another.  As we were driving, I spotted two large white buses with "Hyundai" written on them.  A number of companies--multinationals and Indian alike--run their own buses to transport employees.  Thus, it was not the bus itself that caught my attention, but the fact that these two buses were in Kanchipuram.  Perhaps a few employees were on a tour?  Or, perhaps visiting Hyundai managers were on a sightseeing trip?

"What is the Hyundai bus doing here?" I asked "L."

When he didn't reply, I thought he probably didn't hear me.  I asked him again.

"I don't know what is written on the bus, sir.  I don't know to read much."

"Oh ... how many years did you go to school?"

He answered with three fingers for three years.  The manner in which he responded makes me wonder whether that was an exaggeration--perhaps he is barely literate and that is it?

Later, on my bus ride back to Chennai, I spotted two white buses with the words Foxconn.  While I am all too familiar with Hyundai, Ford and the automobile industry in Chennai (hmmm ... my sabbatical work!) I had no idea that Foxconn has operations in India, and that too in Chennai.

Back in Oregon, I routinely require students to read this essay about Foxconn.  It always shocks most of them.  It troubles them that a workplace has nets around the buildings in order to minimize employee suicides.  I am hoping that Foxconn employees in India get a better deal--after all, at least on the books there are labor laws that Foxconn has to follow, which is a step above China's situation.

Chennai is the new Detroit

Last year, when I was in Madras, er, Chennai, to escape from the heat and humidity, we went to a nearby up and coming hill resort, Yelagiri.  Everything on the way to Yelagiri was educational to me.  The new highway without cattle in the middle, speeding at 70 miles an hour while I was the only one of seven people wearing a seat belt, and the wonderfully pleasant temperature of Yelagiri.  But, what was absolutely shocking--a pleasant one--was how much new manufacturing units were in place all along for quite a while.  As dad often mentioned, "all Western-style factories."  Indeed--sleek factories, and most of them foreign-owned.  Including car factories.
 
Which is why this Wall Street Journal report that Chennai is the new Detroit does not surprise me at all (ht).  In fact, I would venture that Chennai seems to have all the right ingredients for one massive economic take-off: it is already a major IT centre, with a long tradition of highly reputed colleges and universities, and relatively well-connected transport infrastructure.

The effect of such transformation is evident in this quote from that piece:

A sprawling amusement park across the street from the Hyundai factory, a French bakery, evangelical Korean churches and Japanese grocery stores have popped up in recent years.
"The city has really changed," said R. Sethuraman, the Chennai-based senior vice president of finance and corporate affairs at Hyundai's India unit. "We used to only have South Indian food."  

Despite all this, I would bet that Chennai will continue to maintain its flavor; i.e., there is no way it will begin to look like yet another modern city.  Deep down, there is a great deal of traditions, and this might just about become a role-model for integrating the old and the new.  Good for Chennai; after all, without traditions, ... our lives will be as shaky as a fiddler on the roof ...

Planes, trains, and automobiles: deaths in India :(

Within a matter of couple of days, transport disasters big enough to make international news :(

First was this plane crash in Mangalore, in which 158 died

Next was a Maoist sabotage of a rail line that derailed a train and triggered the death of 145

And, this morning I find this news item: 

At least 30 people have been killed and about 30 others injured in a bus crash in southern India, media reports say.

The question is how much were these avoidable ...

I can't even begin to imagine what the friends and families of the dead will be going through  ....

On energy and the environment :)

Photo of the day ... India's traffic

“Even an ambulance or a fire engine cannot come into the locality in case of an emergency,” said M. Sangeetha, a resident.
Report here

GM repaid taxpayers? Not even close :(

Shikha Dalmia dissects the news story, and General Government Motors' claim, that GM has paid the government back.  (Dalmia is also from India.  And, no, I don't know her; India is a land of a billion-plus people!!!)
First, what was the news item?  In his weekly address, the President talked about this:

Fresh off the news that General Motors had paid back its taxpayer-backed loans five years ahead of schedule, Obama said the decision to help the companies as proven to be less costly than the alternative.

The CEO of GM wrote an op-ed in the WSJ, and the title of that was: The GM Bailout: Paid Back in Full

So, what does Dalmia say about this?

when Mr. Whitacre says GM has paid back the bailout money in full, he means not the entire $49.5 billion--the loan and the equity. In fact, he avoids all mention of that figure in his column. He means only the $6.7 billion loan amount.

The rest is not cash but taxpayer our equity in the corporation--yes, lest we forget, we are the majority owners over at GM.
But, Dalmia says that is not all; it gets worse:

the company has applied to the Department of Energy for $10 billion in low (5%) interest loan to retool its plants to meet the government's tougher new CAFÉ (Corporate Average Fuel Economy) standards. However, giving GM more taxpayer money on top of the existing bailout would have been a political disaster for the Obama administration and a PR debacle for the company. Paying back the small bailout loan makes the new--and bigger--DOE loan much more feasible.
In short, GM is using government money to pay back government money to get more government money. And at a 2% lower interest rate at that. This is a nifty scheme to refinance GM's government debt--not pay it back!
GM boasts that, because it is doing so well, it is paying the $6.7 billion five years ahead of schedule since it was not due until 2015. So will there be an accelerated payback of the rest of the $49.6 billion investment? No. That goal has been pushed back, as it turns out.

Hmmm .... hire a couple of accountants and executives who can juggle numbers .... wait a minute; wasn't that Enron's approach as well? Ahem ....

Style your garage: What a neat idea!

The garage sticking out in front of the house is so awfully boring and uninviting a look across streets all along the American landscape .... and in countries like Australia too.  Here is one market innovation that addresses that: billboards that wrap over the garage door.  And not a huge hassle to install it either (well, will be one hell of a challenge for nincompoops like me!).  You see how the garage door does not look like a boring door in the following example?

The Chevy Suburban turns 75. I did not know that!

Thanks to this piece at Slate, I got to read an interesting essay at Wired, on the 75th birthday of ... the Chevy Suburban.  I tell you, everyday is a revelation that I don't know *&^%--I had no idea that this was that old, and I would have guessed that it pretty much debuted in the SUV years of the 1990s.

Wired educates me that:

First debuting in 1935 amid the Great Depression and Dust Bowl exodus, the vehicle then known as the Suburban Carryall holds the distinction of being the longest-continuously-produced vehicle model in the United States. As much as we think SUVs are for the most part a blight upon the landscape, we’ve got to tip our collective hat to the Suburban for its longevity.

 Check out the photographs of the various avatars of the Suburban.

So, Toyota is the new GM?

Remember Government Motors General Motors?  It was bumped into second position by the mighty Toyota?  I suppose one cannot be king for long:

Toyota’s “reputation for long-term quality is finished,” said Maryann Keller, senior adviser at Casesa Shapiro Group LLC in New York, a strategic adviser to auto industry. “People aren’t going to buy Toyotas, period. It doesn’t matter which model. What’s happened is sufficient to keep people out of the stores,” she said in an interview yesterday.

The carmaker said late yesterday it’s expanding a record 4.26 million-vehicle recall announced in November to include 1.09 million additional U.S. autos, to fix accelerator pedals at risk of being trapped by floor mats. Losing its reputation for quality would undercut Toyota’s decades-long campaign to promote reliability and safety that helped it become No. 2 in U.S. sales.

So, if our logic for pouring money into GM and Chrysler because they are American companies that needed to be propped up, will we then extend that sympathy to Toyota too? Just asking :)

Ford and Toyota sell .... Chrysler and GM?

Turns out that Government Motors General Motors, is still struggling .... while Ford, which did not get any bailout money, is doing fine, says the WSJ:

Ford Motor Co. posted a 33% rise in December U.S. light-vehicle sales, ending a stellar year for the auto maker compared with its rivals. Ford recorded its first full-year market-share gain since 1995.
Meanwhile, Chrysler Group LLC posted a 3.7% decline compared with a year earlier and said its full-year sales were the worst the auto maker had seen in 47 years.
The largest U.S. auto maker—General Motors Co.—posted a 5.7% decline, but said its process to sell down Pontiac and Saturn inventory was ahead of schedule and reported a 2.2% increase for the four brands GM will keep after its streamlining.
Toyota Motor Corp. of Japan said its U.S. sales rose 32% to 187,860 vehicles last month.
The results underscore how the auto makers have responded to the recession that began officially in December 2007 and led to the bankruptcy filings of Chrysler and GM.

More cash for clunkers?

Scrotal terrorism versus automobile fatalities

Our preoccupation with screening passengers in the airports of the world, and the costs associated with it, has public policy implications that are not being debated enough. 

(BTW, the problem with the recent terrorist from Nigeria was more a failure to act on the intel reports than of the TSA itself.  After all, this was a guy who should not have been allowed to have a US visa in the first place!)

Heather Mac Donald writes:

In 2000, commercial jets carried 1.09 billion people on 18 million flights, according to a no-longer-linkable Boeing document.   Assuming that the number of flyers has not increased since then, that makes for one would-be underwear bomber out of about 10 billion travelers over the last decade.  Does that record represent success or failure?  Are we jacking up physical security measures on planes and in airports because we think that the risk of another underwear bomber has risen since Dec. 25, or because we think that our record of prevention over the last decade was inadequate?   The notion that we should be able to protect against every terrorist incident is understandable, and announcing that we are not going to try to stop every such incident is unthinkable, though former DHS Secretary Chertoff did make tentative noises in that direction regarding cargo screening.  But it’s still intriguing to me why dying in a terrorist-induced airplane crash has a greater hold on the public imagination than driving on the highway, where there are about 40,000 fatalities in the U.S. a year, much higher on a per-mile basis than the number of deaths from non-terror-induced airline crashes, of which there are many more than terror incidents.

And here is Bill Maher (ht):

After spending the cash for clunkers

Interesting to see the contrasting headlines, which are all based on the same set of auto sales data that came out today:

We can interpret the numbers any which way we want--which is why we warn students on any "data" they are looking at.