The future of the automobile may not be as dark as it appears. OK, gas prices led drivers to downsize. The dreaded butt-busting small cars loom. Smelly diesels start looking better. Gas-electric hybrid vehicles seem less shocking.
It won't be like the 1970s oil shock, which forced the first round of downsizing. Cars shrunk drastically. Automakers took desperate steps. They cut big V-8 engines into four-cylinder ones. Gas engines were converted, badly, to diesel. The Ford Pinto and Chevrolet Vega arrived.
Today it's different. There are plenty of fuel-sipping vehicles out there. Some luxury types are even easy on fuel. Small cars have improved in ride and handling. And summer's relentless rise in gas prices has cooled for the fall.
Is the high cost of energy going away? Not any time soon, if ever, say the experts. But some say gas prices could level off at a national average of $2.50 or less per gallon.
This is the future that pits expensive fuel against the American preference to buy the most metal it can. That was the assessment of a veteran Detroit marketer back in the dark days of dwindling vehicle size. He meant that Americans prefer to buy the biggest, most powerful vehicles available.
That view is shared by many in the Hispanic market, says one expert, Alvaro Cabal, assistant regional manager for public affairs at Ford Motor Co.'s Southeast region.
"People don't want to buy small cars. What they want is fuel economy. Families look for space-efficient vehicles. Hispanics in the United States are used to a size of vehicle that will bring them crash protection as well as carry stuff and the family," he says.
Ford is aiming at more niche markets. For instance, the Expedition sport utility vehicle is big with fewer miles per gallon. Yet when some buyers wanted it bigger for more cargo space, the Expedition grew. "It's niche marketing to targeted customers," Mr. Cabal says.
Economists at Ford forecast gas prices to stay at current levels. "It's not going to go down much," Mr. Cabal adds. "If prices continue at $3 a gallon, then people will get used to it. They may react if it goes to $4."
Right now, the trends are for continued truck sales for work (and in places such as Texas for personal-work use as well). Crossover SUVs (built on car platforms) are gaining. Hybrids are one solution but not the only one, Mr. Cabal says.
General Motors CEO Rick Wagoner has said even if gas hits $4 a gallon, vehicle sales will hold up. One survey says Americans will maintain their lifestyles even in a down economy.
Four-cylinder power and midsize cars are coming back, says Paul Ballew, executive director of global market and industry analysis at GM. Small SUVs are doing well along with crossovers. Owners of midsize SUVs who aspire to other vehicles are behind this move.
It's not just gas prices that are affecting all buyers. "There is a heightened sensitivity to the economics of buying a vehicle from higher interest rates and gas prices. Cars are doing better than trucks, but commercial trucks are holding up well," Mr. Ballew says.
This translates into an economy growing at 2.5 or 3 percent in the final quarter of 2006. Total vehicle sales are likely to come in at $17.2 million, down 4.5 percent from last year, predicts GM's chief economist. There's also "downward pressure on pricing," he adds.
Ford has cut list prices for the 2007 F-150 pickup by up to $1,400. It also increased towing capacity, which is important to truck buyers. Ford acknowledged in September that the company is losing market share in U.S. sales, and it plans to eliminate 25,000 to 30,000 hourly jobs by 2008.
Most Popular Stories
- Bipartisan Budget Deal Gets Key Support in House
- TFA Recruiting DACA Recipients
- Bitcoin Clones Lurch Onto Financial Scene
- Clinton to Keynote Annual Simmons Leadership Conference
- Scotch Whisky Sales Raise Distillers' Spirits
- Holiday Shopping Off to a Slow Start This Season
- Fake Deaf Interpreter Was Hallucinating, Has Schizophrenia
- Health Coverage Disparities Emerge Among States
- Podesta Likely to Reject Keystone XL
- Tea Party Glum in Face of Bipartisan Budget Deal