Lutz says gas prices will need to go up if Americans are to embrace small cars
Bob Lutz often makes a lot of sense. The GM vice chairman is saying the right things about the Chevy Volt and where GM is going in the future, but there's a line in this story from Automotive News (subs req'd) that doesn't make sense to me. Apparently, while speaking at the Automotive News World Congress yesterday, Lutz said that, "We refuse to let the price of fuel rise gradually in the United States and therefore we fail to induce change in consumer behavior." Huh? The last time I checked, the price of gas has risen gradually, especially since the mid-1990s. That's what the DOE says, anyway, as you can see in the graph after the jump. What's it like at your pump?
Now, in a discussion of long-term prices, Lutz has a point. The real cost of gas today is just under what it cost in the late 1970s. And I certainly cannot disagree with him when he says that European-level gas prices (~$8 a gallon) will cause Americans to rethink the types of cars they drive (I should point out that Lutz didn't call for a gas tax or anything like that). But is Lutz right when he says that's the only way this contemplation will happen? I doubt it. We don't need $8 gallons of gas to force a change, especially if that change comes over the next ten years. You'd see one hell of a shift to small cars if gas were $5 a gallon two weeks from now. It's the slow increases that keep us in our big cars and SUVs. We see the prices go up over time and just swallow and insert the credit card. A quick jump will reframe the debate.
[Source: Automotive News]
Reader Comments (Page 1 of 2)
Throwback 2:51PM (1/24/2008)
I think he is right that high gas prices will affect buying habits. What is that number is the question. I think a rise to $5.00 in two weeks would only accomplish panic and angst. If you are upside down in your car loan buying a fuel efficient car right away is out of the question. IF and that is a big IF, gas taxes are to rise, they would have to be gradual to stave off a major recession. Everything that travels via the road would immediately go up in price especially food, causing Americans to stop buying anything that is not essential.
Reply
MikeW 3:09PM (1/24/2008)
No, jackass.
Make good small cars and the people will embrace them.
Does the chevy Aveo has a 6 speed auto? 5 speed auto? 7 speed double clutch? CVT?
No, only obsolete 4 speed auto/5 speed stick. [it is nice that the new '09 aveo's 1.6 liter engine has variable valve timing, but how about a real transmission too]
The 'new' Saturn Astra, 4 speed auto & 5 speed stick. Good job there GM.
Chevy Cobat/Pontiac G5, 4 speed auto & 5 speed stick.
Chevy HHR, 4 speed auto & 5 speed stick.
Master these 'small' cars before you [GM] branch off into microcars (those Beat, Groove, Trax concept vehicles)
Reply
Tony Belding 3:24PM (1/24/2008)
I have to question one of the underlying assumptions here. . .
Is a large vehicle inherently desirable, or is it just a fad? Seriously. I don't understand the assumption that everyone will automatically buy the largest vehicle that they can get. There was a time, a couple of decades ago, when most people bought smaller vehicles, on average, and didn't seem to be hurting from it.
Given a choice between a Jeep Liberty and a Ford Excursion, and assuming gas is dirt cheap, would you automatically choose the hulking Excursion simply on the theory that "bigger is better"?
My feeling is that oversized vehicles are a fad, a fashion, a temporary social quirk that will eventually pass. High gas prices (and other factors) will cause it to pass sooner. The main reason it's kept going this long is because car makers (like GM) have been eager to steer buyers toward bigger and more profitable products.
Reply
Sean 3:55PM (1/24/2008)
Consider when SUVs first came around. People were like "That thing is a tank! What the heck would I drive that for?! I'll kill someone!"
Reply
fnc 3:47PM (1/24/2008)
"Given a choice between a Jeep Liberty and a Ford Excursion, and assuming gas is dirt cheap, would you automatically choose the hulking Excursion simply on the theory that "bigger is better"?"
Most people absolutely would. When gas price is not an issue, Americans have always flocked to gigantic honking vehicles. Witness the gas guzzlers of the early seventies before the first gas crunch.
It must be partly about status (which people love to convince others they have) and I think also partly due to the notion that "size equals safety" so pervasive among those with a lack of knowledge of physics and/or engineering.
Lutz is, sadly, correct. Cars are NOT mere tools to Americans, but extensions of our personality, and like anything fashion related people will always be willing to sacrifice a lot to make just the right statement.
Reply
ug 3:52PM (1/24/2008)
Today is not the same as 20-25 years ago. To a certain extent big cars reflect other changes in lifestyle. People use their cars like motorhomes or mobile offices now because they spend so damn much time in them every day in their long traffic-clogged commutes to and from exurbia. That's why cars are full of pouches and cup holders with a drop-down LCD screen in the back for the kids. So a real lifestyle change is in order to reduce how much time you have to be in your car. Then maybe it won't feel so claustrophobic driving an econobox around.
Reply
Ron Fischer 4:03PM (1/24/2008)
I believe Lutz is starting a new dialog: if the current recession pushes gasoline prices down for long we can kiss Volt, plus other planned hybrids and electrics goodbye.
Reply
Joe 4:57PM (1/24/2008)
There is an additional factor to throw in here as well. Now that there are so many big trucks and SUVs on the road, people are less willing to buy a smaller car out of safety concerns. My mom used to really want a Mazda Miata for when her kids all went off to college. She has since changed her mind for fear of getting hit and killed by a big SUV.
Reply
Dan 5:22PM (1/24/2008)
To MikeW:
I don't think a 5 spd manual/4 spd auto necessarily makes a car obsolete or undesirable. The Yaris and Corolla have those transmissions too, and they're some of the most efficient cars on the road. Looking at models individually, the Astra looks decent. The Aveo is just horrible: low quality, underpowered and doesn't even get good mileage- 24 mpg city, 27 mpg combined. That's 5 mpg less than a Corolla or Yaris and the same as the larger Cobalt.
Reply
Joe 5:43PM (1/24/2008)
Dan,
I drive an '05 Cobalt with a 4-speed auto. I really like that car, with the exception of the transmission. Its awful. And consequently, gas mileage suffers. 4th Gear comes at 40 mph, and everything after that is revs. I would love a 5 or 6 speed automatic. Yes, those transmissions come with a bit more weight, but the weight could be lost in other places.
Reply
Dan 6:23PM (1/24/2008)
Joe, if it makes you feel any better about your Cobalt, the smaller Aveo with a 1.6l engine gets the exact same mileage as you. That totally defeats the purpose of a subcompact!
I just rented an '08 Corolla for a road trip. Even with a 4 speed auto, it had a pretty tall 4th gear for freeway cruising, and I never felt the ratios were too wide. I averaged over 35 mpg even with a little bit of city driving, and I'm not a slow driver. I was very impressed with the efficiency.
The Mazda3 also has 5 spd man/4 spd auto transmissions, and it drives fine too. A 5 spd auto is nice to have, but doesn't make or break the car.
Reply
GoodCheer 6:56PM (1/24/2008)
As much of a bleeding heart liberal as I am on so many issues, I agree with Maximum Bob that the best way to 'guide' consumer purchasing decisions is to use the simplest incentive structure you can. If you want people to WANT more efficient cars, make gas more expensive.
Every couple of months we read another story about high gas prices and SUVs languishing on the dealer's lots. While the period of transition may be painful I think it is the way to go (not that we have much choice).
Reply
Mort 7:53PM (1/24/2008)
Those jackasses have been a part of the problem from the start. They have been in bed with the oil pigs for decades. I hope they go bk, and pigs like Lutz get run out of the country.
Reply
Statik 8:57PM (1/24/2008)
He may get his wish, the American $600 - $1,200 'bail-out' cheques (which are going right on the US national debt credit card) just wiped almost a full 2 percent off the value of the dollar in one day.
Oil had been trending down in the face of a US recession, but government/fed intervention (while being a short term band-aid) is totally screwing the dollar...hence the price of oil.
Reply
GenWaylaid 9:00PM (1/24/2008)
If gas prices go up, the only thing I can do for the next several years is stop going on vacations. It's all well and good to talk about more efficient vehicles, but it takes a long time to afford a new vehicle, efficient or not.
Maybe if my GM car didn't need a thousand dollars of repairs every year to keep running ever since the warranty ran out, I'd be able to trade up sooner.
Reply
Josh 4:05AM (1/25/2008)
Why do most of our cars have engines that aren’t necessary? Of course it’s nice to have a car that does 0-60mph under 6 seconds. But what’s wrong with a car that takes 10 seconds to reach 60mph. Take for e.g. the Honda Accord, the smallest engine is a 2.4 with about 170 bhp. They drive the 2.0 version in Europe and the speed limit on highways is about 70-80 mph.
It’s good to see more cars with smaller engines, although there always seems to be this unnecessary want for power. BMW introduces the 535 (5 series, 3.0 liter engine) diesel 286 bhp and loads of torque. It’s a great car really, but I’ve driven the 520 diesel (2.0 liter engine) (0-60 under 9 seconds, top speed of about 140 mph). So why would I need the extra power??? Could somebody explain?
Reply
ChrisH 5:58AM (1/25/2008)
josh,
simple really. A lot of people enjoy the feel of a powerful car. It brings back memories for some and for others it is their way of venting to mash the throttle.
I don't begrudge them any of it. Look, if you can afford to pay for the gas I am all for you having any car you want. Its no skin off my back. I know there are people bitching that these cars and their drivers should be penalized - completely missing the point THEY ALREADY ARE PENALIZED with higher fuel costs and usually higher maintenance costs as well. Throw in higher insurance and they are paying for the privledge
Reply
Josh 4:23AM (1/29/2008)
ChrisH,
Good point and I can understand where you are coming from. And I would almost agree. But what we tend to forget though is that the world is not big enough to give everybody the same lifestyle. If everybody in the world would live their lives like we do, we need to have more than 5 planet earths (usage of resources. I recently bought a Macbook, it was USD$1200. Affordable, because it's produced by people who don't life the same life we do. If the Macbook would completely be produced in the US, that thing would probably not be affordable at all!
I'm not saying we shouldn't buy it, hey, I just bought myself a Mac, but I do think about the huge differences in this world and try to be "conservative" in my usage of resources.
Reply
Bman 8:40AM (1/25/2008)
OR, OR, OR...
You just need to build a decent variety of well built small cars and maybe somebody would express interest.
You have been purposely pushing customers 'up-market' because of the larger profit margins associated w/ your larger vehicles.
Also, you purposely sell the Aveo as your economy option, because that car is a POS. It serves as a marker that generates bad attitudes towards all small cars. You are truly afraid that buyers would become attached to the small car concept like they did in the 60s and 70s with the beetle. When you don't offer any option to buy quality small cars at this very moment, your assumptions are just that.
Reply
The Other Bob 9:36AM (1/25/2008)
Look at the sales figures and people will realize that small cars do not sell well. Add to the fact that few companies make a decent profit off of them and you can see why car companies hate the idea of being forced to make them.
A higher gas tax is the only way to get people to drive smaller cars. I am sure the car companies are worried that as soon as they invest billions into cars like the Volt, the price of gas will drop and there will be no market for them. If the price of gas remains high, due to the market or higher taxes, they can recoup their costs.
Reply