Two thousand five was an odd year for the auto industry. Here are some of the pivotal highlights and low lights, good signs and bad, which in this world are sometimes all the same thing.
The Fall of the SUV
The long-predicted death of the SUV may have arrived. Gas prices, general shifts in taste, and a glut of competing trucks and passenger cars all contributed to a big drop in the Big 3s SUV sales this year. Almost half since 2004, and thats an Oh, shit percentage in Detroit, where large profit margins on SUVs are the only thing keeping manufacturers afloat.
Too Big To Fail
Partly because of the shrinking SUV sector, American automakers are in trouble. Ford and GM both had massive layoffs this year, and theres more to come. GM plans to shed 30,000 jobs by 2008, and Ford is making its restructuring announcement in early 2006. Both companies watched their share prices fall more than half this year. But no ones going out of business. The auto industry is simply too big to fail. In the 1970s, the government saved Chrysler from going bust, and thats what would happen again. Near the 52-week low at below eight bucks a share, Fords stock looks like a government-backed bargain to me. Ill take 1,000!
If you like this story, consider signing up for our email newsletters.
SHOW ME HOW
You have successfully signed up for your selected newsletter(s) - please keep an eye on your mailbox, we're movin' in!
The Return of the SUV
Dont start celebrating the Hummer-less highway just yet. My parents, who live outside of West Palm Beach, Florida, and drive a Ford Expedition that seems to only play Michael Savage on the radio, love their truck. A lot. They say it makes them feel safe and dont mind the extra money in gas to feel that way. Nothing will change that. Sounds like supply-side American foreign policy right there. As soon as gas prices drop, expect a new wave of SUV models, even fancier and larger. The 1970s oil crisis taught us that the auto industry never learns from the bad times. They only remember the profit-intensive party years. Jeeps already got a new seven-seater Commander; Cadillacs Escalade Series is about to get even more ostentatious; and the new International CXT and RXT are being marketed as $120,000 passenger vehicles with smokestack exhaust. The West Coast Customs pimped-out International I saw at SEMA could be dubbed Why They Hate Us. These things will sell, even more among blue staters who wish they were red. Like Ashton, that faker, who already has the keys to one.
More than 180,000 hybrids were sold through November 2005. Thats about 100,000 more than the year before. Almost every major automobile maker has plans to roll out a gas/electric-model something for 2006, and everyones finally following Toyotas footsteps by putting real research-and-development money behind hybrid technologies. But in some ways the hybrid push may be a Pyrrhic victory. Have you driven the Prius? Its not much fun, and the fuel economy rarely reaches the EPA numbers. If you want to save gas and money and have a nice car, think about diesel. Diesel has come a long way, which is why the more environmentally sensitive European market has been pushing diesel over hybrids for the last decade. New diesel technology filters out carcinogens, burns cleaner for less greenhouse gas and gets better fuel economy with almost unlimited torque. If were lucky, a bunch of new diesel models from European manufacturers will arrive next year. And, if you want to have the first $70,000 zero-impact car in the CAA lot, you can convert your new diesel BMW to run on straight grease. Take that, Priuses!
Despite the new ratio of hybrids to Hummers, average fuel efficiency is stuck around 1990 levels: 27.5 miles per gallon for automobiles. Bush and company derailed efforts to raise the fuel-economy standards, including one that would reclassify SUVs so they dont get a free pass as trucks. Light trucks will have to meet an average fuel economy of 22.2 mpg in 2007, up from the current standard of 20.7, but due to the arcane rules and regulations that govern such matters, those numbers really dont count.
The Target Effect
Finally, good design and engineering has filtered down to the cheapest of mass-produced cars. The Scion xB, the bread truck for our fin-de-siècle, has caught on like wildfire, with its infinite customization possibilities, cutting-edge Japanese design and low sticker price. The soon-to-be-released Nissan Versa, with a continuously variable transmission and sharp-looking interior, is something that, due to cost constraints, couldnt have been made even three years ago at Nissan. And theres the Micronaut-looking Mazda3, my favorite grocery-getter on the road. All of these are available for around $15,000. These cars are cheap, well designed and fun to drive. Just like the Michael Graves collection.