I could see this coming. There is definately a market for small, fuel efficient cars. The problem is, that market is limited. What will happen in the upcoming years will be interesting. Those wanting a highly efficient car, or even a hybrid, will often purchase one the moment they hit the market, or shortly after. Once those in the market for such a car have them, the perspective buyers starts to dry up.
The more pressing issues is the governement requirement for car companies to meet the standard of 35.5 mpg average by 2016. That is a pretty drastic increase in just a few years, and you can't sell people what they don't want. An underlying problem as to why the mpg average hasn't increased greater than it has is due to vehicle weight. With most full size cars tipping the scales 4,000+ lbs, it's no wonder they get the mpg they do.
If you were to take today's powertrains, drop them into cars built 15-20 years ago, you'd probably already meet the 35.5 mpg requirement. Cars have become fat pigs, with too many technological luxuries. Something is going to have to give, and I think it's the government that is going to have to budge. You can't force people to buy something they don't want, and you can't hold a company accountable for producing a product that sells.
The article from the Detroit Free Press:
Automakers are spending more than $50 billion to meet the government's 2016 fuel economy law, but consumers aren't buying enough of the fuel-efficient vehicles necessary to allow automakers to achieve the required 35.5 miles-per-gallon average.
Despite rising gas prices and new electric cars and hybrids, the fuel economy of Americans' new vehicles stagnated last year.
The 2010 average of all new vehicles actually slipped to 22.2 m.p.g. from 22.3 m.p.g., according to a report from Ward's Automotive Reports that examined calendar-year sales.
With unleaded regular gasoline now averaging $3.56 a gallon nationally -- up from a 2010 average of $2.84 -- car buyers are thinking more about fuel economy than they were last year. But replacing a large vehicle with a smaller one is farther than many buyers are going.
Hybrid car sales actually shrunk from 2.9% of new vehicle sales in 2009 to 2.4% last year. Sales of light trucks -- pickups, SUVs, crossovers and minivans -- rose to 51% from 48% over the same period.
Said Gloria Bergquist, vice president of the Alliance of Automobile Manufacturers: "For consumers to really change their buying habits, they must believe higher gas prices are a long-term change, and by long-term, they mean five years or more."
If automakers don't meet the standard four years from now, they could face fines if the law is not rewritten.
American still favor larger vehicles
There are now 160 models on the market that get 30 or more miles per gallon. Plug-in vehicles such as the Chevrolet Volt and Nissan Leaf now are available, as are 25 gasoline-electric hybrids. Even more are on the way as automakers rush to hit the most aggressive fuel-economy requirements since the government began regulating efficiency in the mid-1970s.
Yet, even as unleaded regular approaches $4 a gallon, consumer acceptance of high-mileage technology has been lukewarm at best.
In the first two months of the year, Chevrolet sold 602 Volts while Nissan sold 154 Leafs. In the same period, by contrast, Cadillac sold 2,793 Escalades and Lincoln sold 1,193 Navigators.
"Consumers are the wild card," said Gloria Bergquist, vice president of the Alliance of Automobile Manufacturers. "Americans have mostly chosen to buy larger vehicles. Crossovers accounted for 2.9 million sales last year, compared to 2 million for subcompacts and compacts together."
Still, the new standards have automakers under pressure to make sure each redesigned model is considerably more efficient than the one it replaces. The 2011 Ford Explorer with a 2.0-liter 4-cylinder engine gets 18 m.p.g. in city driving and 26 m.p.g. on the highway. The 2010 Explorer with a 4.0-liter V6 was rated at 14/20 m.p.g.
But if everyone buys a leaner version of the same vehicle being replaced, that won't be enough for automakers to meet the government's average fuel economy standard of 35.5 m.p.g. by 2016 -- unless they're selling mostly passenger cars and large volumes of hybrids, for which manufacturers earn CAFE (corporate average fuel economy) credits.
The U.S. Environmental Protection Agency found that the industrywide average last year improved slightly to 22.5 from 22.4 m.p.g. based on automakers' projection of 2010 model-year sales.
"We studied the 1970s and we looked back at the last couple of oil crises, and we found that the American consumer will buy small, more fuel-efficient cars for literally three to four months," said Rebecca Lindland of IHS Automotive. "And then three or four months later, we go right back to buying big cars."
She has concluded: "The change in consumer buying behavior toward better fuel economy is not aggressive enough to meet the 35.5 m.p.g. standard."
There are exceptions. Sales of Toyota Prius are up 47% this year through the end of February. Volkswagen is seeing sharp increases in the sale of its Jetta and Golf clean diesel models. But diesels, which account for 48% of new-car sales in Europe, make up less than 1% of all U.S. sales.
"Automakers have to work harder advertising their best mileage models," said Mark Cooper, director of research at the Consumer Federation of America. "And they're going to have to work harder to improve the mileage of vehicles consumers want."
General Motors touts its 12 models that get 30 m.p.g. or better on the highway. Ford is promoting its "Four over 40 (MPG)" -- Fiesta, Focus and hybrid versions of the Fusion and Lincoln MKZ.
"Our plan is to have the best fuel economy across the entire range of products," said Ford spokeswoman Christin Baker. "To some degree the buying habits are going to be driven by a variety of needs beyond fuel economy."
Based on EPA data, the adjusted fuel economy performance of manufacturers selling in the U.S. last year ranged from a high of 25.9 m.p.g. for Hyundai to Chrysler's 19.2. Credits for flex-fuel, compressed natural gas, hybrids and electric vehicles raise those numbers by at least 25% for the sake of meeting CAFE standards. For 2011, each manufacturer is required to reach an average of 30.2 m.p.g. for passenger cars and 24.1 for light trucks.
Although industry leaders are skeptical about the Obama administration's proposal to raise the requirement as high as 60 m.p.g. by 2025, they remain committed to hitting the 35.5 target.
"There's been a fundamental change in the industry's thinking," said AAM's Bergquist. "We looked at the world and we see a very precarious energy situation, and we would like this country to have a comprehensive energy plan looking forward."
Contact Greg Gardner: 313-222-8762 or ggardner99@freepress.com
Sales of fuel-efficient autos stall despite high gas prices
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