Just look around, look at the signs of the future.
They tell us that the big cars — big passenger vehicles in general — are dinosaurs. Spiking fuel prices, fears about energy security (particularly in the United States and, to a lesser extent, in Western Europe), cities clogged with traffic congestion and melting glaciers that many people see as a sign of a global warming problem that is very real and very much man-made, are having a profound impact on consumers. That, in turn, is changing how car companies go about their business.
Start with Canada. In March, Canadians bought more small, entry-level and fuel-efficient vehicles than ever before in history — at least as a percentage of the new-vehicle market — notes the market research company DesRosiers Automotive Consultants.
"And you had better believe it when analysts tell you gas prices are driving this equation," company president Dennis DesRosiers wrote in a note to clients.
He added: "The long-term trend to entry-level indicates a general recognition that the cost of energy is going up long-term and consumers need to adjust their vehicle purchase to a smaller platform to reduce these costs."
As pump prices in Canada go up, so do small car sales. It's that simple.
According to M.J. Ervin & Associates, the average price for a litre of regular gas in Canada is now approaching $1.20 — the price it hit in Toronto last week. Premium is approaching $1.30 on average and the average for a litre of diesel is now more than $1.30. Since early 2004, retail gas prices have nearly doubled, according to M.J. Ervin's historical data.
No wonder car buyers are going small and fuel-efficient in greater numbers than ever before. DesRosiers reports that in 2007, entry-level sales reached 51.8 per cent of the new-vehicle market in Canada, up from 50 per cent in 2006. In the previous few years, he says, entry-level market share grew by two to three points a year.
Manufacturers, reading these signals, are now launching some of their best new vehicles in segments where fuel economy rules. "Each and every vehicle company is positioning some of their best products in this segment and this is driving sales," notes DesRosiers.The new products and fuel-efficient technologies we are seeing now, and future ones we will see shortly and in the mid- and long-term, reflect not only fuel prices, however. Sure, fuel prices matter greatly and, in a consumer society, buyers decide much with their pocketbooks.
But there are also bigger societal trends, global trends, which are influencing consumer behaviour. Take the recent initiative by New York City mayor Michael Bloomberg. He proposed a congestion pricing plan last year designed to unclog midtown Manhattan streets and raise money for mass transit.
Bloomberg's proposal failed in the New York State Legislature, but it had unprecedented support in New York City. If it had passed — and Bloomberg has vowed not to give up the fight — New York would have been the first city in the United States to introduce congestion pricing.
But Bloomberg's plan was far from being the first of its kind. The mayor took cues from London, Stockholm and other foreign cities now trying congestion pricing as a way to charge drivers to enter crowded city centres and busy highways.
Advocates say congestion pricing systems work. They cut traffic, generate billions of dollars in fees and make drivers consider alternatives to using their cars. And these systems reflect a broader public sentiment about cars and their role in our daily lives.The Government of Canada, for the first time in history, will regulate the fuel consumption of new cars and light trucks, beginning with the 2011 model year. Ottawa has also proposed regulations to reduce greenhouse gas emissions. While there are critics who say the proposals do not go far enough, it's clear that the federal government, like so many others around the world, sees a future filled with cleaner vehicles making more efficient use of fuels.
