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Is the Success or Failure of a Small Car Dependent on the Price of Oil?


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By Larry Nutson
Business Strategist and Management Consultant


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Larry Nutson
Listening to many auto industry analysts, pundits and scribes you would conclude that the answer to the headline question would be yes. And, led to believe that this is all that matters.

Certainly increased mpg or conversely, reduced fuel consumption and spending less money for gasoline--or diesel fuel--is a significant reason to drive a small or smaller car.

But there are other reasons that are moving more and more into the forefront and becoming a higher priority today. The obvious big reason is lower purchase cost. And then there are items such as reduced or smaller footprint, easier maneuverability and parking, greater confidence in driving a vehicle that you feel more in control of rather than it being in control of you, and then quite simply, it’s all the car that is needed to get one person from Point A to Point B.

American's have typically bought cars to meet their needs--and then some. However, too many "needs" that occur once or twice annually have been included in the purchase decision. American families are changing what all is included in "meeting our needs". American families, which typically have 2 or more vehicles in their household fleet, collectively can change their mindset on car purchases, and equip the family fleet with one small fuel and space efficient commuter car and one vehicle that meets the need of "transporting the whole family" on a regular basis.

The concept of "her" car and "his" car can be abandoned. Whoever drives the greatest amount on any given day should drive the most fuel-efficient vehicle. If a family periodically needs a van, for example, for the holiday road trip to the in-laws, then rent one for that specific use.

Why drive a big van all year long to regularly transport one or two persons. Other vehicles such as a large SUV or a pickup could also be rented for the occasional need. There is far too much big iron on the road with just the driver inside. If we drove smaller footprint vehicles we would reduce congestion, need to provide less space for parking, while also benefit the environment.

The moving-into-retirement baby boomers are downsizing their household car fleets. The now-adult children are out of the house and perhaps one of the “dual-career parents” has retired. They are also re-urbanizing and moving back into cities. A small car, that today is available with all the comfort and convenience features and options of a luxury vehicle, will readily suffice. Cars like the new Ford Fiesta, the Audi A3 and the Mini are good examples of transportation for one or two and also provide versatility for the occasional trip to Home Depot.

The Gen-Y folks seem to be populating the urban landscape and prefer public transportation. With cell phones and texting, they manage their social schedules without needing to drive to so and so’s house to see what’s going on. They spend their money on things other than a car or gasoline, and if it is spent for a car it’s for something low cost.

Will the new line-up of small cars succeed, independent of the price of oil? I think so!

Larry Nutson is past chairperson of the SAE International Public Affairs Committee