by xe

Created on: April 12, 2009   Last Updated: April 15, 2009

The market will move towards smaller-sized and economy-type models American automotive consumers make appropriate decisions based upon their personal economics, job outlook, fuel prices, and the type of vehicle that fits their needs and preferences. Automobile manufacturers build specific models for America for several reasons; the first is because Americans use their hard-earned dollars to vote for certain models that they prefer, by buying or leasing them.

The second reason is a result of the various Federal requirements that must be satisfied in order for a manufacturer to sell those models. The third reason (new to the market) is the high potential that government entities will directly dictate specific models to the manufacturers and people through more direct methods lsuch as; buyer incentives, buyer punishments, and the like.

Perhaps this will strike the reader as a Chicken-and-Egg discussion, but the analysis and logic are very well defined and straight-forward to understand. First, the shock of $4 per gallon gasoline and $120 SUV gas tank fill-ups was just declining when the twin hits of the economic crisis and the new Green-Friendly Obama administration occurred.

These factors all logically point the market in the direction of smaller, more economical and more fuel-efficient models. As previously mentioned, the American car buyer thinks with their wallets. Additionally, these same car buyers are emotionally inspired when the time comes to get a new vehicle. People buy emotionally within the constraints their purchasing power defines for them.

If a person has been driving an SUV and remembers the $4 a gallon gas; has reduced credit because of the economy; has their household income threatened or reduced through job losses; what would be the logical result?

SUVs generally cost more than smaller, more economical cars. During the 1970s oil crisis and today, we are seeing tremendous discounts on SUVs and predatory pricing on smaller cars. Your calculator will show you that there are good life-cycle cost reasons why some of those 'gas-guzzlers' are really better bargains than the tiny cars. But that is a temporary market adjustment phenomenon.

Realistically, the trend of Americans buying smaller-sized cars for economic and government-dictated reasons is why there will be a trend towards economy-sized cars. Not the other way around. When the United States Government makes the rules and then additionally controls the model mix at several manufacturers more or less directly, if that government wants smaller and more green and economical cars, then so it shall be. Safety may suffer, but that will be discovered the hard way five or ten years from now.

I also, however, struggle with the term 'economy-size car models'. This notion would seem to have become obsolete over the last few decades, as premium quality, value and performance cars became more and more available in smaller sizes. The paradigm stated in that premise hints at a subject-d'jour attention span instead of the longer.term professional knowledge of the industry I know well.

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