It is raining small cars

General Motors is going to close four plants making SUVs and pick-up trucks. It may even sell off the Hummer brand. GM’s main rival, Ford has already announced that it will stop assembling pick-up trucks in its Mexican plant, and build a sub-compact car called Fiesta there instead. It is also eliminating one shift in four truck plants.

The Fiesta, incidentally, is touted as the “smallest car in the US” and will roll out in 2010.

What is the US coming to? Will we soon start seeing Maruti Zens and Hyundai Santros in the US?

Obviously, $4 a gallon gas is taking its toll. You cannot live in the suburbs and drive a gas guzzling SUV everyday and not feel the pinch. I have always wondered why people like to drive big cars ? it?s not like they need the space. Typically, it?s single person usage, and most families have a minivan for family driving. Then why drive an SUV to work? I guess the best answer is ? people drive big cars because they can.

Until gas prices climbed through the roof, there was no real issue. Parking space is not an issue for large cars either, except in big cities like San Francisco and New York city, where street parking is very hard to find. I’d say the only need that big cars satisfy would be a testosterone-driven need for one-upmanship in car size.

US Auto companies are much behind the rest of the world in small car technology.

The Big 3 auto companies have never been serious about a small car. They specialize in big trucks, the bigger the better. Now it’s not just about a shift in technology, it is about a shift in mentality from the CEO to the worker at the plant. I wonder how long it will take for this change to percolate.

People are still not shifting in a big way to public transportation.

Part of it is because they cannot – most cities do not have public transportation infrastructure that stretches all the way to the suburbs. Typically, it’s only the downtown area (and some inner suburbs) that are connected through buses or trains.

Add to this that families with children do not want to live downtown – they would like to live in a house with a backyard, which you can only get in a suburb.

Smaller cars still don’t address the underlying issue.

Small cars consume less gas, but they don’t resolve the underlying issue – as long as the US has a driving culture, it will continue to be dependent on imported oil. If other developing countries start driving more cars (say India post-Nano) or if demand for other petroleum products increases (for energy generation/ making petro-chemicals) oil prices will still remain high.

There is no other alternative technology on the assembly line

Fuel cell cars are the best solution right now. Electric cars don’t help much, as one again needs coal, diesel or natural gas/naphtha for generating electricity;

Honda will produce about 1000 fuel cell cars in 2008. GM introduced a fuel cell car in this year’s Consumer Electronics Show, right now, it is just a concept car. Fuel cell technology is nowhere near the assembly line.

Increasing usage of public transportation is the best short-term solution.

This also involves improving public transportation infrastructure (this is true of both US and India). This may also involve providing incentives for people to move away from the suburbs and into downtown areas.

In the final analysis, I am glad that GM is moving towards small cars. It is a small step forward, after many years of going backwards. But I hope they don’t see this as the cure for high gas prices, for it is not. It is just a Band-aid.


5 thoughts on “It is raining small cars

  1. Public transport is still way too expensive. A ride to NYC from where I live is 12-18 bucks per person (round trip, depending on time of day). Just does not make sense.

  2. km: Very true. The only incentive to use public transport is traffic congestion, but that exists in only a few big cities. Bus rides are expensive not because of fuel or bus lease payments (which together, on a per passenger basis should be less than what you pay for your car) but because the major cost of a bus ride is the bus driver’s salary 😦

    Tarun: Thanks 🙂

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