Global auto industry: Let’s play small ball
In baseball, it’s called “small ball” when a team emphasizes speed and strategies such as sacrifice bunts, rather than relying on big home-run hitters. In basketball, “small ball” features smaller, quicker athletes who run the court relentlessly and leave larger, slower opponents in the lurch.
It seems increasingly obvious that the global auto industry will be playing a game of brutally competitive small ball in coming years. The manufacturing of more small, fuel-efficient and less-polluting cars is likely to be the dominant trend among the world’s automakers for several decades to come — and that includes U.S. automakers long accustomed to thinking big in terms of vehicle size.
We’re already starting to see a striking movement toward small ball everywhere from the lots of U.S. dealerships to rapidly emerging Asian car markets.
Oil, gasoline and diesel prices are at record highs, with average U.S. gas prices for regular unleaded fuel at about $3.65 a gallon.
Sales of gas-hog SUVs that get 15 miles per gallon are plunging. Sales of subcompacts, compacts and hybrids that get 30 to 45 mpg are rising dramatically — in some cases up more than 40 percent from a year ago. Sales of mid-size and small “crossover” models also are strong. The crossovers are like smaller SUVs, but more fuel-efficient and built on a car chassis rather than a truck frame.
“The era of the truck-based large SUVs is over,” according to Michael Jackson, chief executive of AutoNation, the big auto retailer. Jackson was quoted in a May 2 New York Times article headlined “As Gas Costs Soar, Buyers Flock to Small Cars.”
As I wrote recently in detailing my purchase of a new compact Chevrolet Cobalt, I’ve long played small ball when it comes to driving. I prefer small cars for financial and environmental reasons. That was true even when I regularly bought gas for 25.9 cents a gallon as a college senior.
It looks as if higher-priced oil and gasoline are here to stay. Prices might drop somewhat below the current levels, but I don’t think we’ll ever see really cheap fuel again.
Can you believe that the average Texas gas price was $1.01 at the tail-end of 2001? We’ll never see that again, or come anywhere near it, barring some unforeseen development.
Here are some reasons cheap gasoline is a dinosaur (unless heavily subsidized by government) and why the global auto industry will be building far more small, fuel-sipping vehicles.
UMost of the world’s giant oilfields — yielding petroleum that was relatively cheap to produce and refine — were discovered long ago and are now in decline. Although there are still huge volumes of proven petroleum reserves, much of what’s left will be more expensive to produce and refine. Higher environmental standards for fuels (such as reformulated gasoline and ultra-low-sulfur diesel) contribute to higher pump prices.
UNew U.S. fuel economy standards will require a 40 percent increase in fuel efficiency by 2020, to 35 mpg.
UThe most rapidly growing auto sales are in highly populated developing nations such as China and India, where many first-time car buyers can afford only small, cheap vehicles. Hence, the new $2,500 Nano “People’s Car” being built by Indian carmaker Tata. It won’t come with a radio, but it will get 50 to 60 mpg.
UTougher regulations designed to thwart global warming and curb air pollution are likely to increase costs for consuming fossil fuels, thus encouraging more small, fuel-efficient and less-polluting vehicles.
Plug-in hybrids could become much more prevalent in coming years. Eventually, totally electric and hydrogen fuel-cell vehicles could become widely produced and affordable.
But that could be a long way off. Meanwhile, as we brace for $4-per-gallon gasoline, the global auto industry is gearing up for a prolonged “small-ball” slugfest the likes of which we’ve never seen.
X Jack Z. Smith is an editorial writer for the Fort Worth Star-Telegram. Distributed by McClatchy-Tribune Information Services.