The chart and additional data provided below concisely portray several important factors impacting both the automotive industry and the on going environmental regulation debate. It was gathered from both public and private industry sources contacted through my consulting work - disclosed on my about page at top.

It isn’t presented to argue one point of view, or another. But to indicate how complex the issues are around the two intertwined elements cited above.

The chart (click thumbnail to view): It’s well known that American automakers make their profits from the sale of light trucks, with passenger cars being virtual loss leaders. The light truck market has been driven by consumer demand. Look at the impact of fuel prices on the sales mix of car makers over recent months. Those are not sustainable ratios of passenger cars to light trucks unless passenger car prices rise dramatically. Yet, there are some important caveats addressed below. It also needs be noted that light trucks rebounded slightly as we moved toward Summer - perhaps as people still have towing needs linked to recreation.

Environmental Concerns: The recent rise in gas prices has succeeded in making the new car buyer a significant part of the environmental activism equation, whether he or she likes it, or not. The market has achieved in months what regulation, taxes and activism have been trying to accomplish for decades.

 Fleet wide fuel economy is increasing and greenhouse emissions from the auto sector are falling. The market is working for the environment and environmentalist goals. While meeting higher CAFE standards remains a challenge, the rise in gas prices allows automakers to swim with, rather than against the current.

For example: Americans drove 9.6 billion fewer vehicle-miles traveled (VMT) in May 2008 than in May 2007 and logged 40.5 billion fewer miles traveled between November 2007 and May 2008 than for the same period a year before.

Recent Maritz findings show that 32 % of new car buyers said fuel economy was their most important purchase decision. At a $4.00/gal. median price of gasoline consumers said they would get a more fuel efficient vehicle immediately.

Additionally, Americans took 2.6 billion trips on public transportation in the first three months of 2008 - nearly 85 million more trips than last year for the same time period. And finally, EIA estimates U.S. petroleum consumption will shrink by 290,000 bbl/day in 2008, equating to a 20 million ton CO2 reduction in 2008.

So what does this all mean?

It provides more questions than it answers; however, those questions are critical in light of on going government action as regards the automotive industry and pertinent environmental-related regulation of same.

Environmental lobbies generally oppose more domestic development of fossil fuels. While not suggesting they do it for the reasons above, would it not make sense for them to oppose it more vigorously if, or when they learn that high fuel prices are doing for their agenda what government regulation has generally failed to do?

Another question - with sales of light trucks ticking up slightly even now as fuel prices begin to settle, what happens if a heavy government hand forces car makers to move away from profitable product lines consumers will continue to want, assuming gasoline prices continue down? In that case, already struggling car makers may end up with product consumers don’t actually want some few years out. And the prices of light trucks consumers may still want will sky-rocket based upon simple supply and demand.

Still, to be fair, if the industry were to continue just as it has and fuel prices continue down, it would be reasonable to expect that the above environment-friendly figures would again reverse and we would end up right back where we started from.

As stated at top, this data isn’t being relayed to argue one particular positon or another. However, it does at least begin to point out the incredible complex systems with which government tinkers when it goes down the road of regulation. And with unintended consequences so often a result, neither the government, the consumer, nor the environmentalist gets what they most wanted in the end.

And all that doesn’t even take into account the ramifications for an industry that employs a great many Americans who depend on it for their livelihood every day.

What consumers, regulators and activists might do well to keep in mind as we go forward is, what with the current economic situation, the last thing America needs is for a major manufacturing sector to go in the tank employment-wise, if you will.

I’m not suggesting we shouldn’t act as a nation concerned about these critical questions - only that we need to act prudently to ensure the best result for all concerned in the end.