Friday, May 02, 2008

Size matters

MANIFESTO

Have American motorists actually gotten a clue?
In what industry analysts are calling a first, about one in five vehicles sold in the United States was a compact or subcompact car during April, based on monthly sales data released Thursday. Almost a decade ago, when sport utility vehicles were at their peak of popularity, only one in every eight vehicles sold was a small car.

The switch to smaller, more fuel-efficient vehicles has been building in recent years, but has accelerated recently with the advent of $3.50-a-gallon gas. At the same time, sales of pickup trucks and large sport utility vehicles have dropped sharply.

In another first, fuel-sipping four-cylinder engines surpassed six-cylinder models in popularity in April.

"It’s easily the most dramatic segment shift I have witnessed in the market in my 31 years here," said George Pipas, chief sales analyst for the Ford Motor Company.
Unfortunately, American car makers are once again behind the curve.
The trend toward smaller and lighter vehicles with better mileage is a blow to Detroit automakers, which offer fewer such models than Asian car makers like Toyota and Honda. Moreover, the decline of S.U.V.’s and pickups has curtailed the biggest source of profits for General Motors, Ford and Chrysler.
That's often been the trouble with American manufacturers, hasn't it? In the hopes of creating bigger and bigger profits, they create those things that they hope will precipitate same, while, in many instances, missing the boat on what consumers really want (or need; can you say, "Supersize me"?).

Will the so-called Big Three have to retool their plants in order to accommodate this new demand? Not bloody likely, as American car makers don't have enough money to keep dealerships open, much less begin a mammoth restructuring of their product lines.

Jim Cramer said the other night that he believed GM, to use an example, wouldn't be an American company within five years. It's circumstances like the data cited above that would seem to make that prediction a no-brainer.

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