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By Robert Rapier on Jan 14, 2009 with no responses

Nobody Wants Small Cars

I reported on it last week in How Quickly We Forget, but the Houston Chronicle yesterday reiterated the point the people are reverting to bad habits:

GM exec complains ‘nobody wants’ small cars now

General Motors Corp. Vice Chairman Robert Lutz said lower fuel prices are discouraging U.S. sales of small cars and gasoline-electric hybrid vehicles.

Gasoline prices “are completely messing it up,” Lutz said today in a Bloomberg interview, referring to demand for small vehicles. “Nobody wants them.”

Lutz endorses the same fix that I have proposed:

Lutz drew parallels to government cigarette taxes that pushed the price of a carton to more than $20.

“That’s the way the market mechanisms work,” he said. “Guess what, cigarettes are so expensive that people weaned themselves off.”

While I of course strongly agree that price is the mechanism that moves people to action (or inaction), there is a bit of irony in that statement, given that the market mechanism currently has Lutz and his fellow automakers asking the government for a big bailout.