Today, in a headline ripped from the 1970s, the front page of The New York Times announced: "As Gas Costs Soar, Buyers Flock to Small Cars." In the immortal words of Yogi Berra, it's deja vu all over again. A lot of people moan and wail about the tough times in Detroit, but it's not as if the American automakers didn't have plenty of time to prepare for the current market. They were warned, over and over again, that they needed to develop better small cars and more efficient vehicles. But they did nothing. Instead, they focused on wasteful but high-margin SUVs. Well, now the time has come to pay the piper.
The Times reports that in April, 20% of new vehicle sales were compacts or subcompacts. That's the first time this has happened in the American market. In another first, more cars with four cylinder engines were sold than cars with six cylinders. Clearly, as gas approaches $4 a gallon, Americans are looking for more efficient cars.
There is no doubt that high cost gas puts General Motors (NYSE: GM) and Ford (NYSE: F) at a disadvantage. Honda (NYSE: HMC) and Toyota (NYSE: TM) offer more fuel efficient vehicles, and their cars have a better reputation for quality. Sales of Toyota's tiny Yaris and Honda's Fit are setting records, while shiny new Ford Explorers and Chevy Tahoes sit on dealer lots. As a Daimler Smart driver said in the Times piece, "I had to smile the other day when I filled my tank for $18 and the guy next to me had a Ford Explorer and the pump was clicking past $80."
The weird thing though is how this has all happened before. Here's a line from the Times report: "Once considered an unattractive and cheap alternative to large cars and S.U.V.'s, compacts have become the new star of the showroom at a time when overall industry sales are falling."
Except for the reference to SUVs, which hadn't yet been marketed by Detroit as basic transportation, that could have been written in 1974. Or 1979. Too bad GM and Ford didn't learn their lessons back then. If they had, they probably wouldn't be hemorrhaging money today.











Reader Comments (Page 1 of 1)
5-02-2008 @ 2:49PM
John said...
And if Honda sold the little two cylinder cars they did back in 1970 the A600, they'd sell a ton of them.
5-02-2008 @ 5:31PM
dwbuck2001 said...
It is hard to believe that such ignorant people could be allowed to inhabit the boardrooms of such giant companies as GM and Ford for such a long period of time. Even more difficult to believe is the fact that even while Toyota, Nissan and Honda are taking more of their market share daily, the people in Detroit are still oblivious of what's going on, and are doing nothing.
5-02-2008 @ 5:51PM
Peta said...
When are the USA motor companies going to start being proactive instead of reactive. WAKE UP AND SMELL THE COFFEE General Motors and Ford. How long are you going to have your nose rubbed in it?
5-02-2008 @ 6:48PM
Tony said...
And if the Ralph Naders hadn't added a crap load of gadgets as safety devices to cars/vehicles and the tree huggers hadn't added a poop full of emissions devices we could easily have cars that break the 100 mpg mark like the 1969 Subaru 360 I had back in 1977(which, by the way, is still on the road and traveling 50 or 60 miles each way to and from work each day). Bring us the simple metro cars for commuting to and from work at 45 (or 55 mph). Let us remember that all things in life have risks and that includes driving a car, a motorcyle, or a bicycle. Let the small diesel and biodiesel cars, mini-mini cans and motorcycles be sold and operated in North America.
5-02-2008 @ 7:18PM
chuck said...
Before you go bashing the American automakers, get your story straight. GM produces more models that get 30 MPG than any other auto company including Honda and Toyota. Unfortunately, the press doesn't seem to want the American car buying public to know the facts!
5-02-2008 @ 7:41PM
william lindblad said...
I'm with chuck, I have a FULL sized impala - gets 23 in town and 34-36 interstate. It is bigger and cost a pile less than any small hybrid. It also can get out of it's own way. While we are on the bandwagon of beating the crap out of Detroit - they build these big hogs since you - the public - wanted them. If they could not sell them, they would not build them. Ford had a great idea with the Edsel and Chrysler had the airflow - both bombed. As to little gas efficient cars?
Anyone remember the Nash Metropolitan? The Studebaker Lark? The (Nader) Corvair? The only ones that ever made it were the Ford Falcon & the Plymouth Valiant. Just because Ralph did not like the Corvair did not mean the rest of the world felt that way. It was not a sports car, but it handled like one in steering as it was rear engined. The U.S. has a lot of bad drivers, it wasn't the car. Small six with a stick - got 34-36 without trying. Only real problems were heat in winter and they tended to catch fire. They were built here before the first fairlady hit our shores. Hey!, the fairlady was a piece of crap - worse than ours.
5-02-2008 @ 8:04PM
PacificGatePost said...
Buyers moving wholesale to small cars is a major shift for the American consumer, with more to come.
The big three weren't ready.
http://pacificgatepost.blogspot.com/2008/05/small-cars-pardigm-shift-for-america.html
5-03-2008 @ 1:00PM
Micro1234 said...
When idiots are buying full size SUVs and full size trucks for no reason other than status it is very hard for a company to ignore the market and $10,000 profits per vehicle. That is exactly what Ford and GM did. The fact that any money spent on developing cars in the late 90's turned out to be wasted money since union wages made any medium to small car unprofitable is the real reason that Ford and GM are behind the curve. In hindsight they should have taken the losses on cars so they would be better prepared for the environment today. Fortunately, both GM and Ford have more than just credible entries. GM has the new Malibu that beats the Camry and Accord in refinement. Too early to determine quality since it has only been out three months. The Fusion at Ford beats both the Camry and Accord on the quality front and actually has a suspension that begs one to drive the car instead of the floaty feel of the Camry and Accord. The Fusion gets a mid cycle refresh at the end of the year with hybrid variants coming out in early 2009. It will be the new high-water mark for the mid-size segment that both the Camry and Accord have left since they both had the foresight to make their newest versions larger. The hottest car on the market right now just so happens to be the Ford Focus. It had 88% more retail sales in April compared to the year earlier. I challenge anyone to testdrive it and compare it to the Corolla, Civic, Yaris, or Fit. Those who do make the effort end up buying it. To sum it up, it is like driving a Mercedes in regards to interior noise refinement but you get 35 mpg according to the EPA, but believe me you get 40 mpg realworld if you try. In just a little over a year the Ford Fiesta will arrive and everyone will see who the real leader in economical cars is. Toyota will be left scratching their heads asking "Why did we create the Yaris but design it to get only one mile per gallon more than the much larger Focus and make the interior refinement near that of a Yugo" The Fiesta is a game changer that will take Europe and China by storm this year and the U.S. next year. It will be the gold standard by which all B cars are judged. It will put the Ford brand in the number one position in Europe and it will take U.S. market share away from Toyota and Honda when it arrives here. Of course, if you look at the numbers the Focus is already taking share away from the Corolla and Civic. Imagine the one two punch the Focus and Fiesta, together, will be able to deliver.
5-03-2008 @ 5:53PM
Roger said...
9 years ago VW brought the Lupo 3L TDY to the German market. It gets 75 mpg; seats four, has two airbags etc; a top speed of 100mph and can cruise at 80mph all day. Where is it today? Discontinued in 2005 due to low sales. They sold a total of 25,000 in 6 years. It was too slow for the German Autobahn where speeds in the fast lane are often around 130mph. It was never sold in the U.S. since it requires a special diesel fuel not available in the U.S. at the time. With low sulfur diesel (15ppm) available now please bring it back. It will sell 50,000+ annually in the USA.
5-05-2008 @ 3:23PM
jpdr1100 said...
So many errors in these posts one hardly knows where to start.
The Lupo wasn't canceled for poor sales. It was simply replaced by the lower-cost Fox. And VW's diesels still aren't on sale in the US because they STILL can't meet our emission standards, low sulfur fuel and all.
And Nadar didn't kill the Corvair, GM did. They found it was cheaper to build the Nova, which shared many parts with other Chevys. GM has continually killed off its small cars rather then evolve them and solve their problems. Corvair, Vega, Chevette, Cavelier.......
Keep posting guys. I love reading these distortions.