The new round of price increases for iron ore, coal and steel are putting immense pressure on car makers. As if that weren’t bad enough, rising fuel prices are also causing a change in consumer attitude: they’re driving less. Small cars are now in demand, hitting American manufacturers especially hard because their model range emphasized gas-guzzlers for too long. The result was falling profits.
But time is running out on German manufacturers as well. It’s true they did their homework as far as cost was concerned, but that left them little flexibility in case sales declined. They’re now faced with trying to pass new expenses on to suppliers. The solution, however, lies elsewhere.
Daimler, BMW and others must now re-engineer their offerings away from gas hungry, ostentatious muscle cars toward much more efficient models. That’s not an over-ambitious undertaking. Those who wish to reach their sales targets in the future will have to offer cars that use less then five or even three liters per 100km.* Additionally, concept projects like the one-liter car (235 mpg)** need to be dusted off, re-examined and developed because a market for them is already there.
If car manufacturers don’t adapt to this reality, the sales target of 3.2 million cars annually will remain nothing more than a pipe dream.
*Fuel consumption in Europe is expressed by the number of liters of fuel a car uses to drive 100 kilometers, or about 62 miles. Five liters per 100km equals about 47 mpg, three liters per 100 km equals about 78 mpg.
**For more on the 235mpg car go to http://www.inhabitat.com/2008/05/27/transportation-tuesday-vws-235mpg-concept-coming-soon/