Two Americas When it Comes to Vehicle Demand

In back-to-back press conferences at the North American International Auto Show in Detroit, General Motors announces it is expanding its lineup of hybrid-electric vehicles (HEVs) – while reviving the muscle-car era with a Chevy Camaro concept.

Talk about extremes.

GM hopes to make HEVs affordable to the masses, with the Saturn Vue Green Line that will start at less than $23,000 when it goes on sale this summer, offering a system that doesn’t go so far as to run on electricity alone, but uses its electric power to improve fuel efficiency.

GM also is developing full hybrids capable of running on electric power, a gasoline engine or a combination of the two. It debuts mid-2007 on GM’s fullsize SUVs.

On the other end of the spectrum, if the Camaro goes into production – a decision is expected late this year – its lineup would have a choice of V-8s right up to a 500-plus hp performance version.

Prior to introducing the concept Camaro, GM ran a parade of vintage ’69 models, belching power and smoke and thrilling the crowd with throaty exhaust tones.

The juxtaposition of hybrids and muscle cars reflects the fact there are two markets today, says Bob Lutz, GM’s product chief.

“The whole country is schizophrenic,” he says.

GM is not sending mixed messages, Lutz asserts, it is just responding to them.

One end of the market is crying for hybrids, fuel cells and environmental sensitivity, while the other end wants more horsepower and bigger engines.

A Ward’s tracking of engine installations on ’05 models reflects a shift in demand to more affordable and fuel-efficient vehicles, with midsize engines in the 3L-3.9L displacement range hitting an all-time high of 35.6%. Larger 4L engines backed off slightly and penetration of 8-cyl. engines also declined.

But 28% of the ’05 light vehicles purchased have V-8 power, more than the 10-year average of 26.7%. And they outnumber the 25.2% of vehicles sold with 4-cyls.

Chrysler’s Hemi V-8 continues to prove so popular the auto maker struggles to meet demand.

The potential of another pony car war could keep V-8s in vogue. Ford scored a sales success with its rejuvenated Mustang, prompting me-too concepts in the Camaro and a Dodge Challenger, also unveiled at the show.

Consumers may talk a green game, but HEVs still only reflect about 3% of sales in the U.S. Given a choice of a 4-cyl. or V-6 in a midsize car or truck, the bigger engine often wins.

And while displays at the auto show include a plethora of new small cars including the Toyota Yaris, Honda Fit, Nissan Versa and Sentra, Chevy Aveo, Dodge Caliber and Jeep Compass, it remains to be seen how many end up in driveways.

Or what they are parked beside.

Hollywood types today have a Lamborghini Gallardo performance car and a Toyota Prius hybrid in the same garage, Lutz says.

The competitive auto maker is the one diverse enough to supply both for today’s dichotic market.

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