May 25, 2019

Are Automobiles Getting Smaller?

The age of the large, brawny vehicle is ending and Americans will squeeze into smaller vehicles in the future.  Many auto analysts predict that by 2015, the size of the U.S. fleet will be just about the same as Europe’s and Japan’s.  Consistently higher fuel prices will lead consumers toward smaller engines and eventually smaller vehicles.  Hybrids and electric vehicles will be options, but the technology remains expensive.  The large outlay of cash for an electric vehicle has to be offset by years of owning the electric vehicle to get a return on your money.  In some cases, one would have to own the electric vehicle for 10 years or more just to break even.

With the price of gas skyrocketing over the last few years, it has become harder and harder for the average American to maintain the same standard of living that he or she once enjoyed.  According to the government, the average price of gasoline in 2001 was $1.41.9 a gallon.  Today that same gallon of gasoline will cost around $3.88.9 dollars.  You don’t have to be gifted in math to calculate that if your minivan has a 15 gallon tank, in 2001 it cost $21.40 dollars to fill up.  Today that same tank of gas would cost at least $58.35.  Now if you fill up more than one car, as many families do, and you fill up once or twice a week, the cost can rise easily to over $116.00 or more with an annual fuel cost of at least $6,000.00.

As gas prices continue to rise, we will no doubt see the decline of the larger vans and trucks.  No car seemed more out of touch with reality than the GM Hummer.  I think production lasted about 10 years.  I recall being in gas station a few years ago and after I had filled my Ford with some 14 gallons of gas, I stood by and waited for the gentleman across from me to complete filling his Hummer.  When he passed $100.00 and 40 gallons of gas and was still going strong, I went into the station and paid my bill and was on my way.

Now smaller vehicles are not good news for soccer moms or large families.  But I was surprised to discover that today there are more families with dogs than children.  The average number of children per household in the 2010 census was 1.90.  In April of 1940, the number of children per family was 3.76.  Our socio-economic situation is changing along with cost factors that are driving up the price of an automobile.  Newer automobiles must have multiple air-bags, catalytic converters, and meet new emission and fuel standards.  It is hard to predict where all this will go but the future of the two ton SUV does not look good.

I also see the size of the manufacturer’s fleet getting smaller as well so model choices will be more limited.  There was a time when many manufacturers tried to make a car for every segment of the buying public.  The higher mileage and emissions standards set by the Obama administration which take effect in 2012 and are to be achieved by 2016 will transform the American car and truck fleet.  These new rules will bring the average of all new cars and trucks sold in the United States to an average of 35.5 miles per gallon.  It may be more cost effective to discontinue a model than to try an attempt to re-engineer it to meet the new fuel standards.  Car companies are already rewiring vehicles so components such as air conditioners and power steering pumps are powered by electricity, rather than by the engine, saving fuel.  One thing for sure is that even with all these changes, the size of the future automobile will not be as large as in years past.

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Written by
Donald Wittmer

DONALD WITTMER is a retired business executive who held key roles in the automotive and banking sectors. For a time, he also served as a Fiscal Agency Manager for the Detroit branch of the Federal Reserve Bank of Chicago. He received his undergraduate degree from Cincinnati's Xavier University, an M.A. in business management from Central Michigan University, and earned certification in bank operations from the School of Banking at the University of Wisconsin-Madison. A husband, father, and grandfather, he teaches part-time at the Kent Place School for Girls in Summit, New Jersey.

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Written by Donald Wittmer