Accelerate Mpls

Americans in general have never associated small cars with high price tags.  They are seen as regular transportation and not premium vehicles.  In Europe this is simply not the case rather small cars are very popular and the price tags are not cheap.  They are fully featured cars with options many small cars do not have in the U.S.  With the new CAFE standards coming soon automakers in the U.S. are starting to realize that maybe we need to be a little more like Europe.  Smaller cars with higher fuel efficiency and more options.

The Detroit Auto Show was all about downsizing.  Engines were being downsized using lower displacement and it is all about getting more from less.  Utilizing forced induction both in the way of turbo charging and super charging the automakers are doing what they can with the latest technologies.  It is going farther then that.

Americans are realizing they need less.  Not everyone technically needs a Suburban to haul the kids to soccer practice.  The reality of it is when you are taking two kids to soccer practice you are not towing a 25 foot boat.  In fact most people that have large vehicles do not need them at all.  It is a perception and comfort thing.  While I know some of you are readying your pitch forks, just hear me out.  Yes, some people do need their large vehicles.  Some people actually do need SUV’s.  I drive an SUV and do use it to tow boats up north.  If we weigh out how much I need an SUV it is probably more then some but still less then others.

Interior of the 2012 Ford Focus

The automotive manufacturers are starting to bet on the little guys.  Ford’s new small car line up will begin with the new Fiesta.  The Fiesta has a base price just above $13,000 but that price can get very close to $25,000 after customizing it with a myriad of options.  Next Ford debuted the next generation Focus as a 2012 model at NAIAS last month.  The new Focus will be more refined while offering more options and features.  While they have not talked pricing you can naturally assume it will cost more.  The current Focus pricing starts a little over $16,000 topping out around $22,000.  It is estimated by some that while the base price of the the new Focus will increase slightly, a fully optioned Focus might approach $30,000.  That is a lot of coin for a small car.  The question is, are Americans willing to pay a premium on these new small cars?  Some are probably scratching their heads saying how could they charge so much.  We as Americans have been asking for the same product that Europe has been getting for years.  Ford has finally listened and decided it would be cheaper to amortize costs, thus the “ONE Ford” strategy comes to play.  Cars will be developed by Ford to be sold globally with minor changes for safety regulations and such.

2011 Chevy Cruze

Chevrolet is betting on the new Cruze to carry its sales in the compact car market.  This new model will replace the lackluster Cobalt which itself replaced the Cavalier.  The new Cruze is said to be rated at 40 mpg on the highway which is an impressive number to be sure.  The car is said to be dynamic to drive and offer the premium feel of a larger car.  That is exactly what these smaller cars with larger price tags will have to do.

So will we Americans embrace these smaller cars with larger price tags?  I think it all depends on where the starting price tag is.  This all goes back to my post about why strippers are important.  The base price on a model is what seems to drive traffic to show rooms.  Maybe that will change with time and it will be features that drive customers to the showroom.  One thing is for sure, the pricing and options work in Europe where people are paying more for less.  Are you really getting less?  In the end it is all about how you look at it.  You are getting more miles per gallon, you are getting more technology and amenities all in a slightly smaller package.  So the question is, will people buy these small cars that all the auto manufactures are betting on?

“Go big or go home.”  This saying was something I learned at a early age as ‘the American way.’ The American way has had many trends, and many of these trends move over to the auto industry.  The winds are changing at our doors again.

1984 Dodge Caravan

In 1984 Dodge introduced the world to the Dodge Caravan.  These were an instant success as they were a better option than driving around in a station wagon.  The concept of a minivan appealed to families hauling the kids with lots of gear.  With decent fuel economy and the ability to haul lots of people and luggage, it is no wonder why the minivan was a hit.  Once the initial fad wore off, the minivan started getting the soccer mom name plate.

1991 Ford Explorer

Once the minivan was no longer the ‘cool’ vehicle to be pulling up to soccer practice in, something had to took its place.  This was the birth of the SUV fad.  Having a vehicle that sat up higher made people feel like they were the king of the road.  The higher seating position and the four wheel drive capability gave people the sense of safety and security.  With poor fuel economy and un-necessary running costs for most people, the SUV was truly a symbol of what Americans thought they needed.

1999 Cadillac Escalade

In 1999, Ford’s premium brand, Lincoln, introduced the Navigator. The Navigator was essentially a rebadged Ford Expedition.  Sales were successful enough that General Motors felt it was necessary to rush something into production that would compete with the Cadillac badge.  General Motors immediately rebadged the GMC Yukon Denali to become what was known as the first generation Escalade.  This is when SUV’s became the status symbol in America.  It was no longer cool to just have a SUV. You needed a large, premium badged SUV.

Now we skip forward to last summer.  Gas prices hit an all time high in the U.S. and people stopped their love affair with SUV’s as quickly as it started.  People started switching the SUV status symbol to hybrids.  It is always amazing to see how short term American’s memories are.  Now that gas prices have gone down significantly from last summers, we are getting back into buying SUV’s.  That said, something else has happened since last year and it is larger then just the auto industry.  The economy has been hit hard and so have people’s pocket books.  This has hurt auto sales across the board. Everything from the Toyota Prius to the Chevrolet Suburban, no one was immune to the down turn.  Sales are starting to pick up again, and people are going back slowly.  The main factor seems to be that people still like SUV’s but they want them more fuel efficient.  The new 2010 Chevrolet Equinox is rated at 32mpg on the highway.  This is very good milage for a crossover SUV since the first SUV’s were averaging 17mpg on the highway.

It seems the tides have turned once again, and people are now in love with SUV’s and good fuel mileage.  The old adage “go big or go home” seems to have turned “go green or go home”.