The auto industry is beginning to look more and more like a crooked politician with lies and deceptive statistics. Everyone knows the industry is hurting recently: gas prices are up, vehicle miles are down, people are buying less, and people are buying smaller. All of this means that car companies are making a lot less money than they used to. Environmental concern is definitely a big player here, but when you consider that hybrid sales are also down a considerable amount this year, it’s obvious that the current ill state of the auto market is a result of a global economic downturn.

The industry is getting desperate

Why do I say this? My partner on the EcoModder forums sent me this link, telling me it would be worth writing about it. To be honest, I didn’t even read it for a few days, but now I’m glad that I did.

There’s no denying that people are becoming more and more concerned with the environment, but instead of selling hybrids, the industry is trying to twist that environmental concern into sales of big cars and trucks:

“Small cars don’t last,” DesRosiers says. “They fail to retain value, utility or desirability.” And while longevity may not be a sexy subject, it stands to reason that if some vehicles are useful longer than others, what consumers save in fuel efficiency will be lost in higher capital costs. In other words, small car buyers may be robbing Peter to pay Paul and manufacturers are just following suit.

Before the phrase “completely idiotic” starts to get thrown around, please keep in mind the Dennis DesRosiers is a professional industry consultant / smut peddler. It would be a stretch to call him stupid, but the things the he tries to have us believe, at best, push to limits of truth.

Firstly, take a look at my article on how fuel efficient cars are holding value better than less fuel efficient vehicles. If you don’t believe me, go to kbb.com and check anything out for yourself. Some of the larger cars may be worth more after a few years, but only after losing more value, on average, than smaller, more fuel efficient cars.

DesRosiers goes on to assert that small cars are less durable:

But according to DesRosiers and other analysts, small cars are less durable. First off, they are built lighter. Secondly, they are cheaper, so they attract younger drivers who tend to maintain them poorly. They have a lower resale value, which guarantees they won’t trade hands many times before they are scrapped, and they’re more likely to be written off by insurance companies if they are involved in serious collisions. In other words, “the useful life of the vehicle” is as short as their wheel base, according to Erich Merkle, an automotive consultant with Crowe Chizek in Grand Rapids, Mich.

To me, it makes sense that small cars are lighter. They’re smaller, therefore they consume less materials, and weigh less. And get this, they’re smaller, therefore they consume less materials, therefore they are more environmentally friendly! DesRosiers expects to argue that big cars go to the junkyards less frequently, but he “conveniently forgets” that when they do, they also send more materials to the junkyards with them. This article also seems to imply that cars end up in some sort of landfill, rather than stripped and melted down for scrap and reused in new vehicles.

If you look at this reliability index, you will see that contrary to the assertions of this article, cars like the Honda Civic and Toyota Yaris are both in the top 6 of all cars in terms of reliability. The article in question specifically attacks these two small cars for being the type that would end up in junkyards due to their “lack of durability,” but that doesn’t seem to mesh with what most consumers and analysts are saying about the same cars.

Secondly, DesRosiers seems to conflate young drivers destroying their cars with the cars not being durable. Does he seem to think that young drivers who don’t maintain their cars wouldn’t be sending SUVs to the junkyard in just the same way they do small cars? He expects us to be too stupid or uncritical to think about these deceptions, but I hope that most of us here on EcoModder can see through it.

Now, onto his assertion that small cars just aren’t worth as much:

Comparing the entry-level Chevrolet Aveo (1,148 kg), for example, to the mid-size Chevrolet Malibu (1,642 kg), Merkle adds, “You will get rid of the Aveo faster. It’s much lighter, it doesn’t have the strength. After about three years, the Malibu will be worth something; the Aveo, no.”

I did a little research on KBB, and comparing 2008 models with 2005 models with 45,000 models, yes, the Malibu will be “worth something.” He’s telling the truth! The 2005 Malibu LS 4D is still worth a whopping $11,815, whereas the same model of Aveo is only worth $9,115.

But wait, there’s more. The 2008 only costs consumers $12,188 for that model while Malibu owners are paying $19,522. That means the Malibu has lost 40% of its value in just three years, but the Aveo has only lost 25% of its value. I guess the Malibu wins the race to the bottom, not the Aveo, contrary to DesRosiers’ suggestion about their comparative values.

So, in conclusion. When someone who’s paid to tell you what kind of car to buy is doing just that, use a critical eye to look for deception, because you may just find some. I hope you all take the same approach to what I write as well. I may not be right, but I’m also not in the market to sell my Civic, either!

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Currently in the US market there are a few types of people looking for small, fuel efficient cars. Traditionally, those people have been the types to wait in long lines for Smart ForTwo tests drives and Prius ownership: the treehuggers (of which I am a part, so I say it with love). With gas prices skyrocketing and the threat of global recession looming on everyone’s mind a new buyer has sprung up: the frugal new car buyer.

As gas gets more and more expensive, fuel efficiency will become more important to the cost of total ownership. These days, it’s not hard to make the case for buying a Civic Hybrid in terms of payback and fuel costs, especially with gas prices expected to rise in the next few years. However, not everyone wants a Prius, needs a Prius, or can afford the upfront cost expecting to be paid back in several years.

This leaves a large segment of people who wish to save money on both gas and the initial cost of the vehicle. Traditionally, these people have bought things like the Civic and Corolla, but with those cars getting bigger and more expensive over the years, people have been looking for other options. Currently, there aren’t many besides the Honda Fit and Toyota Yaris. They’re definitely both good cars, but consumers are still want for more variety and selection.

That’s why I was so surprised when I read this today:

“The Mazda2 is a very good product, and we’ve received very strong requests from dealers. But it is still under study,” said Mazda president Hisakazu Imaki in a report about the possibility of the small car’s North American debut.

“One of the biggest factors (for why) the decision hasn’t been made is that the Mazda3 is still enjoying strong sales,” Imaki said.

This is the story we hear from automakers time and time again. They’re selling cheaper, more fuel efficient cars in other markets, but because of the lower profit margins aren’t selling them in the US. Especially since that would take some of that frugal, efficiency-minded market away from the small cars currently for sale.

But what’s the solution? Well, like other countries have done, we could institute tougher fuel economy regulations. The automakers sure whined about the new CAFE regulations the last time around, but if they’re not in a rush to bring more fuel efficient cars to market in the US, the regulations obviously aren’t that strict. While more regulation might seem onerous, I posit that the burden will be primarily in marketing existing vehicles in North America, and not in a complete technical revolution of any sort.

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No, there hasn’t been a government decree, and no, this not the proclamation of some automaker. Recently, IBM interviewed auto executives anonymously about the future of the industry, and came to the conclusion that, among other things, all or almost all new cars would be hybrids by the year 2020.

If it’s not apparent to you already, the report makes it even more obvious that the auto industry is changing rapidly. Not only has the Prius sold over 1 million units, but companies like Mitsubishi are already working on fully electric vehicles.

It seems like a bold statement to make, doesn’t it? Currently, there are very few new hybrids on the market, but in 12 short years we’re supposed to expect that every car will be a hybrid? Well, in my opinion, the industry is definitely moving in that direction. Even if there are a few conventional gas sports cars running around, the main takeaway from this report isn’t the conclusion, but more the impression from the top automotive executives.

Whatever the market looks like now, you can be sure that the people at the top are looking for change, and towards a market comprised of hybrids, electrics, and eco-friendly options.

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