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Saturday, October 01, 2005

Small Car Comeback in the US

This one via Treehugger:

[October 1, 2005 12:40 PM - Michael G. Richard, Ottawa]

The Washington Post has an article on the changing automotive market. "We are seeing people who are driving $40,000 Suburbans trading them in on $15,000 Corollas," said Mathews, who manages a dealership in a state where big trucks and sport-utility vehicles rule the roads. "The last 30 days have been unlike anything I've ever seen in the automotive industry." Civics, Focuses and Corollas are flying off the lots - in certain cases they are being bought straight off the shipping trucks - and unsold full size SUVs are piling up (despite all the incentives and discounts).

All that in a market where consumers don't even have all that many small cars to choose from, so it's not far-fetched to predict that the small japanese cars that are coming to North-America soon will be quite successful and that more will come from all automakers.

Hybrids are very hot too (August was a record-breaking month), but sales are limited by the supply side for now. We've also read on many cyclist blogs that there are more bikes on the roads. All of this is far from being enough, of course, but it's nice to finally see some mainstream movement in the right direction after over a decade of things getting worse.

Well this is an encouraging trend, but I would like to caution that it is likely a knee-jerk reaction to the spike in gas prices caused by Katrina and Rita. Time, and likely where gas prices eventually settle out (this winter will be an interesting one!), will tell if this trend will continue. I imagine that, at least, sales of SUVs will level out, rather than continue to rise as they have been recently. GM Vice Chairman Bob Lutz seems to agree with me here. Check out this related article over at Green Car Congress. Furthermore, I bet we will continue to see hybrids selling as quikly as they can be manufactured, at least for the next couple of years. Now let's just hope that the government gets in on the act here and helps push along this new consumer trend. See my previous post on a proposed bipartisan bill to increase CAFE standards by 32% in the next ten years.

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