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Pinched consumers driving innovation

American consumers finally are succeeding where the nation's political leadership is failing. They are forcing Detroit to move away from the tanks on wheels that have masqueraded as passenger vehicles. One after another, the big carmakers announced last week they were slowing production of trucks and SUVs and replacing them with hybrids and fuel-efficient cars. GM announced it might even kill the Hummer. It is painful for many drivers, but $4-a-gallon gasoline is changing public attitudes about consumption, and the impact could be broadly felt for years to come.

Though Vice President Dick Cheney famously dismissed conservation as no more than a "personal virtue," it is clear more Americans see energy efficiency as a break for the pocketbook and the climate. According to the automotive research firm R.L. Polk, new vehicle registrations fell 7 percent in the first quarter compared to a year ago. The rate fell twice as much, 16 percent, in the Tampa Bay area. But bucking that trend are small, fuel-efficient vehicles. In the bay area, Honda registrations are up 11 percent, while Mini, maker of the popular Cooper series, has seen a 40 percent jump.

The trucks and SUVs now on the road have years of gas-guzzling ahead of them. But a shift in demand is already taking place. Americans are not only driving less (the 246-billion miles traveled in March is down 4.3 percent from a year ago) but they are also dumping bigger cars and changing their driving and buying habits. The Ford Motor Co. said recently it would eliminate a shift at four truck plants and replace production of full-size pickups at a Mexico factory with a subcompact, the Fiesta, which will be its smallest car in the United States.

GM followed suit, announcing it would close truck plants, begin production of small and electric vehicles and launch a "strategic review" of the Hummer, which could include a revamp "or complete sale." Even the used-car market for trucks and SUVs, so strong for years, has slipped as consumers seek to shore up their finances in the realization that cheap gas is likely a thing of the past.

The switch to smaller cars is the latest step Americans are taking in response to rising prices at the pump and to a sluggish economy. Ridership on buses and commuter rail is up. More home buyers are looking to live closer to urban areas where they work. The public is reacting in ways that could ease consumption for years to come. The rollout of more fuel-efficient cars will be felt over the lifetime these vehicles are on the road. Having people live closer to work saves government the expense of serving ever-outward suburbs. It also makes mass transit more practical.

The price of gas is hurting countless American families, and their pain is real. But consumers are changing their behavior, and the marketplace is responding.

Pinched consumers driving innovation 06/09/08 [Last modified: Tuesday, June 10, 2008 1:46pm]
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