Green Update–>Is the Small-Car Renaissance Real?
We all want to see good motives, where some see only profit.
Last week’s New York Times piece “Detroit’s Rebound Is Built on Smaller Cars” tells us that “nearly one in four vehicles sold in the United States in April was a compact or subcompact car, compared with one in eight a decade ago.” About 27 percent of the small cars sold in April were so-called “American models,” versus 20 percent the year before.
As causal factors, the article notes the Obama administration’s stress on fuel economy, the UAW’s concessions, Japanese complacency, and so on. They also mention rising gas prices.
But this “stunning change” in the American buyer’s psychology was really caused by his finally recognizing that a) gas prices are likely going to stay high and b) small cars aren’t really so bad after all.
Consumers change their habits when circumstances force them to or when they have a better choice.
The Times piece avoids congratulating Detroit too soon, but it clearly applauds the move to get GM in particular off the big-trucks, big-profit path. It echoes a jargon-filled interview with GM North America President Mark Reuss that appeared a few days later in Automotive News.
One of the more interesting statements Reuss made was the following:
The average transaction price is always a great indicator. Last month [the Cruze] was $2,000 to $3,000 over Corolla and Civic. Granted, those are older products. These small cars, they’re heavily contented and great cars to drive. So we’re seeing a difference in small-car content buying, and we’re seeing a lot of people come to Cruze.
He’s saying that people are buying these cars in part because they have a lot of “content”—that is, convenience features, upgraded audio, Bluetooth, wi-fi, and stuff like touchscreen or voice-activated infotainment systems.
What he’s not saying is that such content is where a big part of a carmaker’s profit lies. This is not to discredit cars like the Cruze and the Focus (right), which are indeed worlds better than what the industry formerly produced.
But consumers really haven’t changed all that much since the big financial bang. And carmakers still know where their hot buttons are.
Tell us what you think: Is Detroit really changing its tune? Are small cars here to stay?