Now, Toyota is abandoning plans to complete construction on a plant it has begun in Mississippi.
Bloomberg:
Toyota Motor Corp., heading toward its first U.S. annual sales decline in 13 years, indefinitely delayed the opening of a plant in Mississippi that was to begin building the gasoline-electric Prius hatchback by 2010.
LATimes:
To date, Toyota has spent about $300 million of the Mississippi plant’s anticipated $1.3-billion price tag. The automaker plans to finish building the plant, now about 90% complete, but it won’t install the metal stamping machines, robotics and other expensive equipment needed to assemble cars.
Car demand has fallen off for all auto manufactures, not just the American big three of Ford, GM and Chrysler.
Every major automaker reported a year-over-year sales decline of more than 30 percent on Tuesday. The Detroit carmakers were among the worst hit, with GM's U.S. sales falling 41 percent and Chrysler LLC's dropping 47 percent.
Their overseas rivals posted abysmal results as well. Toyota's sales tumbled 34 percent, while Nissan's dropped 42 percent and Honda's fell 32 percent.
Even luxury automakers BMW and Mercedes-Benz were down big in November, 25% and 30%, respectively.
The steep drop off in demand for cars has accompanied a drop off in demand for driving itself, with vehicle miles driven sharply down on a year-on-year basis as the Department of Transportation reports October 2008 travel on all roads fell 3.5% compared with October 2007, while cumulative travel for 2008 has also fallen by 3.5% (.PDF Report).
The decline in auto demand and travel has serious planning implications, especially for state budgets.
Transportation is supported by large public expenditure in infrastructure. States receive a lot of money from gasoline tax, and as gasoline consumption wanes with reduced vehicle and travel demand, so too do tax receipts from the sale of gasoline. This has become such a problem that some states are exploring new methods of taxing transportation.
North Caroline is considering taxing people based on the number of miles they have driven. The Charlotte Observer:
With gas-tax revenues plummeting, the state of North Carolina is looking seriously at taxing motorists for how far they drive.
If the “road-use tax” is implemented, it would at first be simple – with the state checking your odometer annually and taxing you based on how many miles you have driven. But transportation experts say new GPS technology could allow the state to charge people different rates based on when and where they drive, in an attempt to manage congestion.
Placing GPS devices in American drivers' cars has never been popular, but it has been talked about in Great Britain since 2003:
Its report suggested every car should be fitted with a Global Positioning System (GPS), which measures its distance from three or more satellites, and using triangulation, can pinpoint the position of a car within five or 10 metres.
Each vehicle would transmit its location back to a central computer, probably via the mobile phone network.
Different charges would be set, depending on which roads the driver uses and the time of day.
The bit the government likes is that it could cost more to use congested routes, during the rush-hour.
The basic idea behind such schemes is that greater command and control of driving patterns would lead to more efficient use of public infrastructure, namely, less congestion on roads.
This would occur because the government could track and charge cars rates dependent on the demand at the time of the use of the roadway. High demand times--like rush hour--would require higher tolls for drivers taking trips during this time. And with GPS technology placing cars spatially, drivers in high-cost areas like city center downtowns could be charged more to drive in them than drivers in rural areas, regardless of time of day or traffic volume.
Even though there is opposition to GPS trackers in the US, the economic philosophy behind the reason for using them is already at work in the United States. Toll roads in Southern California change in price depending on traffic. To use toll roads, cars must have transponders in them that communicate with electronic toll booths, removing the need for slowing down and paying tolls and allowing faster travel flow through toll collection areas. And because most new cars have the option of GPS navigation installation, it is not many steps from requiring people to have transponders to use the toll roads to requiring people to have GPS receivers to use the toll roads, and from there to use freeways, and from there to use surface streets.
More finely-tuned transportation pricing could finally lead to substantial reduction in automobile use in the US, but only if policymakers set the price of driving high enough to compensate for the environmental and social costs of driving cars. If the prices are set to maintain the existing traffic patterns at the time of implementation, the pricing system will do nothing to decrease the negative impacts of driving. However, if the pricing system makes driving appropriately expensive, policymakers could actually have a significant impact on car use in this country for the first time.
Well, the first time the impact would lead to a reduction.
However, far more likely is that we will see stimulus rather than reduction.
The Obama administration is already talking about upgrading our roads and bridges. Why would we do that if we want to decrease our use of the car? Scientists and car manufacturers tout the increased efficiency of their vehicles. This means nothing to the social costs of sequestering millions of people away in private vehicles for two hours each work day.
The cost of driving is much greater than is currently reflected by its monetary price. If we change how we charge people to move around, we might be able to actually influence how they do it.
The best thing to happen to the US in recent memory was the tremendous increase in gasoline prices. Driving demand was actually falling.
Now that gasoline has become inexpensive again, US demand for gasoline is increasing. What we should do is place a flexible tax on gasoline that will establish a floor in its price. That floor should be around $4 per gallon, the point at which demand actually started to drop in this country. As gas prices fall due to decreases in oil costs, the tax should be increased to maintain the $4 minimum. As oil costs increase and gas cost rises, the tax could be relaxed.
While this scheme will reduce gasoline usage and dramatically increase the money available for states--at least in times of low oil costs--it will do nothing to decrease the uncertainty that states face when forecasting expected tax revenue from the sale of gasoline.
For that, the only solution is to curtail our state-budget dependence on gasoline tax.
