From guzzlers to sippers: The changing auto market

The rapid rise in gas prices has caused many consumers to shift from buying large gas-guzzling SUVs to more fuel-efficient small cars. And this shift in the marketplace has forced the auto industry to drastic changes in realigning their model mix, reallocating production capacity, and adjusting future model plans. While consumers want instant relief to the economic challenges they face, the auto industry is grappling with production cycles measured in years, not months.

Automakers are doing what they can, with many making bold moves to address the rapidly changing car market. Many companies are scrambling to move forward to create more compact cars, while others who already have a number of fuel-efficient vehicles are trying to keep up with the demand.

Below are some examples of how car manufacturers are adapting to this changing environment:

Ford recently announced a reduction in truck production and the new F-150 will be delayed two months due to the truck sales slow down. This will allow the current inventory to sell off and give Ford a chance to reorient the F-150 more toward commercial, rather than consumer use. Ford also is working to add more small cars to its lineup, including the European version of the Focus and Fiesta. Production will increase for the U.S.-made Focus, as well as the Ford Escape and Mercury Mariner small SUVs. Ford also can’t produce the hybrid versions of these SUVs fast enough.

Chrysler announced they will stop producing twins of similar vehicles for different models, such as the Dodge Nitro and Jeep Liberty, and would cut back their product line. Chrysler is also forming strategic partnerships, including an alliance with GM on hybrid technology and teaming with Nissan to create a new small car.

GM announced a new compact Chevrolet model to begin production in mid-2010. The automaker is also racing ahead on the Chevrolet Volt plug-in car, which is expected to debut by the end of 2010. GM also announced truck plant cut backs due to the decrease in sales.

Even though Toyota offers many fuel-efficient vehicles in their lineup, its sales story is also mixed. Toyota has not been able to keep up with demand for the Toyota Prius—the most fuel-efficient car Consumer Reports has recently tested—due to limitations on battery availability. Also, the company will cut production on some of their larger vehicles like the Tundra and Sequoia, the latter a victim of launching at the wrong time.

Honda, on the other hand, is enjoying a sales surge. In the month of May, U.S. Honda sales were up over 11 percent due to a 23 percent increase in Civic sales. This fall, Honda will open another U.S. plant to produce more Civic sedans. It, too, has recently launched a redesign of its largest SUV (the Pilot), though it is too soon to interpret the sales data.

The state of the automotive market is a volatile one and the rapid shift to fuel-efficient cars and hybrids is causing all manufacturers to alter their plans. Those that can adapt quickly to the demand will enjoy success, but others may face difficulty.

—Liza Barth

For information on the most fuel-efficient cars and alternative fuels, see our guide to driving green.

 

Comments

[Ellen T]

Which auto companies will be bringing back the small pickup with better gas mileage first?

[Frankie]

So Toyota is victim of launching a pickup at a wrong time and the reason why their sale are falling is lack of Prius?

June sales:
Lexus: -21%
Toyota: -10.3%
Toyota trucks: -38.9%
GM: -8.3% (total)

Toyota is in the same boat as GM for trucks: they make tons of money on them and they are not as green as we think:
Fuel consumption: (City/Hgw)

Sequoia: 13/16
Chev Suburban: 14/19
Tundra: 13/16
Chev Sierra: 14/19
Land Cruiser: 13/18
Hummer: 13/18

So, in essence, Toyota has the same concerns as other US manufacturers. They do experience the same predicaments , not because of the lack of Hybrids, but because of their product mix.

On another note, Honda looks dandy, but again they have a limited line for trucks; for the sake of comparisons:

Ridgeline (with a 6) 15/20
Sierra (V8) 14/19
Pilot: 15/20
Acadia: 16/22

So , in essence, all the media talk about is the lack of vision of the big three. Honda and Toyota are not much different, all things being equal. A truck is a truck and the laws of physics do apply, no matter where the trucks are coming from.

[PMC the 1st]

Good post, Frankie.
In Dec 2002 issue of Consumer Reports, CR urged us to buy fuel-efficient vewhicles. And if we couldn't do that, than at least buy the most fuel-efficient vehicles in a particular class of vehicle.
Which makes me wonder why Consumer Reports is still advertising for Toyota (and to a lesser extent, Honda). Toyota is showing no repentance for their gas-guzzling ways by offering incentive after incentive on their most fuel-inefficient vehicles, and Honda is getting ready to launch a gas-guzzling V8 midsize luxury sedan, as well as a V10 (there's fuel efficiency for ya') sportscar that's sure to get worse mileage than a Ferrari F430, with or without active fuel management.

[Jeff Bartlett - Consumer Reports]

As a full-line manufacturer, Toyota is feeling the impact from rising fuel prices at both ends of its product line.

As regular readers well know, PMC, that remains our standing advice, while also factoring safety, reliability, and overall test score. Likewise, we review products without fear or favor, and do not pander as your comments have suggested. We test the product that is on the road today, without influence about what may or may not happen in the future. Should Honda launch a V8, we will test it in whatever product(s) it appears.