Cost of Oil Leads to Shift in Vehicle Demand

by Larry Smith

American automakers have concluded that the shift to small cars in response to rising fuel prices is "permanent and structural".

For the first four months of this year sales of the smallest, least expensive cars exploded by 33 per cent in the US, while sales of all other vehicles were down.

And Bahamian car dealers have also noticed a trend towards smaller-engined vehicles in recent months: "There is a greater concern among consumers that the vehicle has a smaller fuel efficient engine," according to Toyota dealer Fred Albury.

Just over 4,100 new vehicles were sold in the Bahamas last year - 34 per cent were passenger cars, 42 per cent SUVs and 24 per cent commercial vans. Korea's Kia, a leading maker of inexpensive small cars, leads the local market this year with a 17 per cent share to date. The price of a gallon of gasoline has topped $5.50 in Nassau.

Meanwhile, the Americans are scrambling to catch up with Asian and European automakers, but won't be able to roll out the next generation of fuel-efficient small cars until 2010. That's when Ford will begin selling the Fiesta subcompact in the United States, Chrysler will sell a Nissan-made subcompact and General Motors will add a car based on the European Opel Corsa.

Ford recently acknowledged it can't keep pace with shifting consumer tastes, even after adjusting production, and is still making too many big vehicles.

"This is the most dramatic shift I've seen in 30 years," said George Pipas, a Ford sales analyst. "Small cars are going through the roof. We can't find the ceiling with small cars, and we can't find the floor with big trucks."

GM says it will stop making pickup trucks and big SUVs at four North American plants, and will consider selling its Hummer brand.

“These prices are changing consumer behavior and changing it rapidly,” said GM chief Rick Wagoner. “We don’t believe it’s a spike or a temporary shift. We believe it is, by and large, permanent.”

GM also set a firm schedule for production of the extended-range, electric-powered Chevrolet Volt. Wagoner said the Volt, which is powered by batteries augmented by a small gasoline engine, will be available for sale no later than the end of 2010.

"“We believe this is the biggest step yet in our industry’s move away from our historic, virtually complete reliance on petroleum to power vehicles,” he said.

Comments

[Rick Lowe]

We certainly see interest in more fuel efficient vehicles.
However, when consumers realise the smaller size, they have second thoughts in many instances.
Cars like the Honda Fit and Chevrolet Aveo, Toyota Tercel among other brands etc should be the future.

[Nanaqu2]

Well, we in the Bahamas need to ride our bicycles more, and start to walk also.