Commentary
Will there be an auto world tomorrow? Will we give up all our pickups and SUVs and cross/utility vehicles? Will we all have hybrids or Mini-sized cars?
Nothing is certain until the price of fuel stabilizes, which might be by the end of summer. But we can answer these questions now, anyway.
There will be an auto world, even if fuel goes to $5 or $6 a gallon. The proof is that fuel has been selling at those prices in Europe for years. In fact, I’m looking at a chart that shows U.S. fuel, even at $4 a gallon, is low compared with Europe: $10.05 a gallon in the Netherlands, $8.98 in Germany, $8.71 in the U.K, and $5.09 in Canada.
If you want great deals, go to Venezuela where gas is subsidized by the government and costs $0.25 a gallon; or Iran at $0.41 or Saudi Arabia at $0.60.
The numbers in Europe are exaggerated because the weak dollar makes prices seem higher to us. They haven’t gone up as much in the local currency.
That said, most of the world still pays a lot more for fuel than we do, and they still drive cars.
Pickups still will be built in the U.S. but probably near half the volume as before. They will become commercial vehicles again, for the most part. A stylish new breed of front-wheel-drive pickups is coming though. They’ll be here in a few years.
Most truck-based SUVS will fade away. The huge profits from pickups and SUVs will fade, too, because those profits came from the now-disappearing huge volumes.
CUVs will remain a major part of the market. Americans are not tiny. We need space in our cars for ourselves, our families and all our stuff. CUVs are our station wagons. We can get 25 mpg (9.5 L/100 km) from a modern CUV and that will be enough.
We will buy more cars than trucks but not many minicars. The family-size cars will be the size of the Honda Civic and this will be the biggest market segment. There will be more smaller cars, too, like the coming Ford Fiesta.
But the major change will be with engines and transmissions. More will feature direct injection combined with turbocharging. There also will be more 4-cyl. engines and 6- and 7-speed gearboxes; dual-clutch transmissions, stop-start generators that shut down the engine at red lights, and more powerplants will feature cylinder deactivation.
We’ll have some diesels but not like Europe, where they comprise 50% of sales. Diesel fuel is too expensive and hard to find in the U.S.
Battery shortages will hold down the growth of hybrid-electric vehicles. Plug-in HEVs will appear, but volumes won’t be big enough to make an impact for years. The same will be true for pure-electric cars.
All this will push up the price of our smaller cars. Today’s $22,000 model will be $30,000 tomorrow, and today’s $30,000 model will be closer to $38,000.
We will continue to build millions of cars each year in North America. But we can’t know if our domestic car industry will survive.
Our government seems more interested in shutting domestic factories than helping them survive, and fuel prices are smashing the light-truck business of all auto makers in the U.S.
Chrysler dreams of getting small cars from China and Japan. It’s shrinking, killing models, shutting plants. The trouble is that once started, it’s hard to get to a stopping point.
General Motors seemed about to level off at 23% or 25% of the market, but it’s not happening. Its new vehicles are excellent, but buyers happy with their Toyotas and BMWs are not about to switch over anytime soon.
So instead of leveling off, GM continues to shrink. Will GM run out of money or split-off North America in order to save its other operations?
There will be an auto industry in the U.S. Even now Volkswagen, Audi and Alfa Romeo are looking for plant sites.
We will pay more for fuel, but that won’t stop us from driving. The question is if America cares at all what auto makers and nameplates survive.
Jerry Flint is a columnist for, and former senior editor of, Forbes magazine.
