Blog: Freddie & Fannie matter, yes they do
Dave Leggett | 14 July 2008
They may sound like a couple of old-time showbiz names, but Freddie Mac and Fannie Mae are reminding us this week that the credit crunch is still very much with us, even if we are in danger of obsessing over the impact of dearer oil in our own sector.
As far as the auto industry is concerned, the way the credit crunch plays out is important because of its impact on vehicle markets and consumer demand. It’s looking less likely that 2009 will see a sharp rebound in the US economy and the scale of ongoing problems in wholesale credit markets is brought home by Freddie and Fannie’s woes.
Meanwhile, automakers are having to adjust to rapidly changing market conditions. Last week, Toyota became the latest to announce a major restructuring of US manufacturing operations. If even Toyota is having trouble shifting its Tundra pick-up that tells you how serious things have become.
With gasoline prices where they are, you don’t need to be Einstein to conclude that the Toyota Prius hybrid should be a hot seller. Indeed, there is no doubt that people are clamouring for it in the US and dealers are screaming. But supply constraints – on the battery - mean that Prius sales this year in the US have actually been down on last year.
They’ll be pulling out the stops at Toyota to get that supply situation resolved when the next generation Prius hits the market in 2009. Let’s just hope no-one else at Toyota keels over with ‘karoshi’ (a Japanese word that I understand means sudden death through overwork; the fact that there is a specific word in Japanese for that phenomenon is slightly mind boggling – a bit like the multitude of words the Inuit have for snow, it’s a kind of cultural pointer).
Looking further ahead, a firm in Britain believes it is onto something with the idea of local hydrogen refuelling stations (hydrogen gas produced via electrolysis on water) and the ability to retrofit ICE engines to take hydrogen. There’s more work to do but it’s quite a vision and presents a radical answer to the ‘chicken and egg’ fuelling infrastructure hurdle that alternative propulsion/fuel technologies are often faced with.
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