Detroit (Finally) Builds Small Cars, Profits Return


Photo credit: lorentay

The nation's auto industry would have gone belly-up in 2008 if it weren't for the intervention of the federal government. GM, Chrysler, and Ford were essentially bankrupt. And though they -- and most observers -- continue to primarily blame the economic collapse, it should be pretty clear what brought about their decline: Business plans that banked solely on gargantuan, gas-guzzling SUVs and paid no mind to ascendant gas prices. So it should come as no surprise that Detroit is finally rebounding -- and it's doing so thanks to its production of small cars.The New York Times reports:

By refocusing on small cars and de-emphasizing the gas-guzzlers that had long sustained the industry, General Motors and Ford in particular are preserving jobs and positioning themselves to prosper. Their efforts are already paying off in the marketplace. Ford's tiny Fiesta is the best-selling subcompact in the United States this year, and G.M.'s Chevrolet Cruze outsold every other compact car in America last month except the segment-leading Honda Civic.

Nearly one in four vehicles sold in the United States in April was a compact or subcompact car, compared with one in eight a decade ago. Of the small cars sold in April, about 27 percent were American models, compared with 20 percent a year earlier.

The corollaries behind such numbers aren't exactly rocket science: High gas prices, and there's a low demand for SUVs. Low gas prices, and suddenly people feel obliged to drive around 4-wheeled military fortresses.

But none of those big brained analysts and execs at the Big Three automakers could see that as India, China, and Brazil continued to develop at breakneck speeds, as more consumers demanded oil, and less and less of it was being discovered around the world -- that prices would be more prone to spike? That's why the mess is their own fault. And that's why Japanese automakers have dominated the global market. Of course Detroit's comeback is being mounted on small, efficient cars -- they're the only thing that make sense in an increasingly oil-strapped world.

Well, high speed rail, more extensive mass transit, and better bike infrastructure would really make sense. But this is America here, so let's take it one step at a time.

More on Small, Efficient Cars
Fiat Gets 35% of Chrysler in Exchange for Small Fuel Efficient Cars
Amory Lovins Was Right. Small Cars Deemed Efficient , Safe
The Problem? Gasoline is Basically Free : TreeHugger

Tags: Oil | Transportation

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