Will $1 fuel change what car you buy next?
Imagine being a car maker or importer at the moment. Not only would you have the global economic meltdown to deal with (and the subsequent sales slump that’s brought with it) but you’ve also got an Australian dollar that’s wiped off more than one-third of its value in a couple of months.
To top it off, fuel prices have dropped some 25 per cent from record highs to closer to $1.20 a litre. Some experts are predicting a sub-$1-per-litre price.
It makes you wonder whether the rush to small cars might now slow down. Or – shock, horror – people might actually start revisiting the large cars they’ve been abandoning in droves.
After all, fuel prices were the primary driver of the most radical shift in buyer sentiment the automotive industry has experienced throughout its 100-plus years.
It was also the thing that’s prompted car makers to reconsider their forward product plans. Large car programs are being re-evaluated. Plants are closing and car makers are looking at more efficient engine options. And hatchbacks that Americans have for decades shunned are now being rushed to that market. Locally, Ford Australia will even start building a small car locally for the first time in almost a decade.
A few months ago I spoke to Ford’s recently appointed global marketing boss, who said Ford was designing cars working on an oil price of between US$100 and US$200 a barrel. Yet today the price of oil is closer to half that lower estimate.
It’s easy to understand why product planning departments and car company executives are tearing their hair out. In between working out how to shift the cars that are stockpiling, dealing with massive economic uncertainty and generally trying to work out how to make money in such tough times.
Somehow, though, I don’t think car makers will be rushing to abandon their plans to downsize their vehicles or introduce more efficient alternatives.
The environment is now headline news and is making its mark on the cars of the future. While there’s still debate about the recyclability of batteries from hybrid cars and the energy used to produce such vehicles in the first place, the notion of using less fuel when you’re actually driving the thing is attractive to governments and individuals alike.
Plus I think there’s a new breed of younger buyers more than happy to live with a small car and a bunch of former larger car drivers who’ve realised that small cars ain’t that bad.
At the same time I’m confident large cars still have a future; some people still need space while others just want it.
But I’d be interested to see how much impact the lower fuel prices will have on the market over the next few months.
What do you think? Has the lower fuel price we’ve seen lately made you reconsider a bigger, heavier or thirstier car? Have you downsized and have no plans to look at a bigger vehicle? Or have you stuck with a large vehicle and are just happy to see your weekly fuel bills reduced?
Toby Hagon