Automotive News - July 28, 2008 - (Page 14) 14 • JULY 28, 2008 $4 gas won’t turn the U.S. into Europe Jesse Snyder The sudden escalation of gasoline prices to more than $4 a gallon has hit American motorists like a 2-by-4 between the eyes. Big-pickup sales have cratered. Small-car sales are booming. Environmentalists talk of Americans reaching a tipping point, an irreversible change in car-buying habits toward conservation. American motorists soon will buy the same gasoline-sipping small hatchbacks that Europeans buy, some analysts even suggest. I agree we must cut consumption and waste. And I have no doubt the U.S. market will embrace more fuelefficient vehicles over time. But even if U.S. motorists all go green tomorrow, American roads won’t resemble those in Europe anytime soon. EDITORIAL STAFF 313-446-0361 E-mail autonews@crain.com Web site www.autonews.com Keith E. Crain Publisher and Editor-in-Chief Peter Brown Associate Publisher and Editorial Director DETROIT 313-446-0361 Fax: 313-446-0383 1155 Gratiot Ave. Detroit, MI 48207-2997 David Sedgwick Editor dsedgwick@crain.com Edward Lapham Executive Editor elapham@crain.com Richard Johnson Managing Editor rjohnson@crain.com John K. Teahen Jr. Senior Editor Mary Beth Vander Schaaf Deputy Managing Editor Charles Child International Editor David Kushma Retail Editor Dave Guilford News Editor Philip Nussel Special Projects Editor James B. Treece Industry Editor Jesse Snyder Senior Writer Karen Faust O’Rourke Insight Editor COPY EDITORS: Bob Allen, Tom Fetters, Patricia C. Foley, Kenn Jones, Gregory Skwira Susan Zavela Bamford/Graphics Editor Rick Kranz/Product Editor REPORTERS: Leslie J. 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He is the former executive editor of Automotive News Europe and lived in Europe for seven years, first in England and then in Germany. their own transportation, could afford the fuel and had places to park. Europeans chose smaller vehicles because they had smaller families, their government handled much of their transportation, fuel was expensive, and they couldn’t park big vehicles anyway. Here vs. there Here are seven reasons why not: 1. Europe’s infrastructure is older, smaller and less flexible. U.S. cities generally are built to accommodate transportation. But European cities are old. Munich is celebrating its 850th anniversary. Dig in your garden in London, and you may hit 2nd century Roman artifacts. Central-city “old towns” are charming for pedestrians but a nightmare for drivers. European streets and roads are narrow, and most can’t be widened. 2. European governments are hostile to passenger cars. Europe has to import crude oil, so governments have long taxed it heavily to discourage use. London’s congestion charge has become the Continent’s model for coping with central-city traffic: Tax cars and hike the fees until they stop coming. Road-use taxes subsidize mass transit rather than repair roads. If traffic flows rapidly enough to make tire noise, cities slow it to a crawl with speed bumps, “traffic calming” chicanes — zigzag obstacles — or choke points. Every time a car owner sighs The Ford Focus is a small, entry-level car in the U.S. market. But in Europe, where fuel and car ownership cost more, it is considered mainstream size. and rides a bus to work, bureaucrats cheer. 3. Europeans embrace mass transit. Europeans strive to make mass transit work, and it shows. Across the European Union, most sizable cities have multiple layers of connected public transportation that run on schedule: subways, trains, buses and trolleys. Except New York, Chicago and some other major cities, most American metropolitan areas offer just limited bus service, but you never sense that mass transit is a priority. To a cynic, British transportation policy is “Take the bus or stay home.” U.S. policy is “Drive yourself anywhere you want.” 4. Europeans drive shorter distances. When Europeans do use their cars, their destinations are often nearby and usually within their own country. 5. Fuel and car ownership costs are higher in Europe. Paying $4 a gallon for gasoline stuns and outrages Americans. It would thrill Europeans. They routinely pay double that. Other European taxes vary by country, but all financially punish ownership of large, powerful vehicles. 6. Europeans have smaller families. American women average 2.1 children. In the European Union, the perwoman average is 1.5. As a German friend recently explained: “We have one son. We don’t want a big family with two or more children.” 7. Americans have parking spaces. Those big lots with rows of pull-in parking that Americans take for granted don’t exist in most European cities. Parking spaces are rare, precious commodities in Europe, and the ones that exist are tiny. Hatchbacks are the dominant European body style because they’re shorter than sedans. All this adds up to why European cars are smaller than American vehicles. Mostly, people buy the type of vehicle they need. There are a few cars that sell in both markets. But the Ford Focus is mainstream size in Europe and entry-level size here. Until now, many Americans chose bigger, more versatile vehicles. They had more ground to cover, had bigger families, were responsible for all Looking ahead For anyone who is dreamily envisioning two-seat Smarts putt-putting about a reformed and green America, I’m sorry. That image is impractical. U.S. vehicles will get smaller, but Americans won’t go for Euro-sized cars, at least not before gasoline reaches $9 a gallon. Absent decades of construction, mass transit is hardly an option for most Americans. However, I do see vehicle-size convergence ahead. But it is less Americans going smaller than it is Europeans looking for ways to squeeze out some space for bigger and more powerful vehicles. Europe’s central cities have effectively shut out cars. But in the rings around Old Town, people load their families into SUVs and minivans, park in the free lots around large discount stores and swing by the drive-through restaurant on the way home. So where did they learn that? You may e-mail Jesse Snyder at jsnyder@crain.com For Europeans, America still spells opportunity Jason Stein Just a hunch, but I’ll bet when the good, hard-working folks in Wolfsburg woke up to a headline that said “Chattanooga,” you could have heard the Teutonic equivalent of “Huh?” all the way from the German countryside to the hills of Tennessee. Chattanooga-who-who? Southern Tennessee has about as much in common with northern Germany as Jack Daniel’s whiskey has with Beck’s beer. Get ready to get better acquainted. Europeans are continuing to head to America with a vengeance — and not just to sell but to build and operate plants and protect themselves from the volatility of the dollar, not to mention grab some market share from the ailing domestic competitors. BMW did it. Mercedes did it. And now VW will build a car plant in the southern United States. comment Do Europe’s carmakers know something Americans don’t? Jason Stein is publisher of Automotive News Europe. It will be the first time since 1988 that Europe’s largest carmaker will produce cars in the United States. Ups and downs Isn’t it interesting that VW’s announcement came on July 15, the same day that General Motors introduced another massive round of restructuring in the United States? GM is downsizing; Chrysler LLC’s future is undecided, and Ford Motor appears to be in disarray. For the Europeans, America spells opportunity. Audi is considering U.S. production, perhaps early in the next decade. Alfa Romeo surely will come. BMW is investing $750 million in its South Carolina plant. Mercedes might expand existing operations. Seat is thinking about a plant. But VW’s move is the first significant commitment to the U.S. market during the most recent dollar decline. Who knew that the United States would still hold such appeal? European carmakers have been enticed by generous tax incentives and inexpensive land. But clearly they haven’t lost faith. That means a lot to a U.S. market that is struggling. Do Europe’s carmakers know something Americans don’t? Yes. There’s opportunity on U.S. shores. European expertise in small cars and flexible manufacturing has never been more relevant than now. It’s about time Is it a gamble? Not really. Even if the dollar recovers from its lows, there is ample reason to want to be present in the world’s largest market, especially in the long term. Truth be told, the expansion is long overdue. So, brush up on your geography, Wolfsburg. And take a crash cou http://www.autonews.com http://www.autonews.com
Table of Contents Feed for the Digital Edition of Automotive News - July 28, 2008 Automotive News - July 28, 2008 A scared-stiff industry stomps on the brakes No-lease edict stuns Chrysler dealers Hummer: Bonuses, buyouts Amid the gloom, Mercury celebrates Ford banks on Mulally's small-car plan PACE awards open for innovative suppliers GM expands employee discount plan through July American Axle blames strike for big quarterly loss Mercedes expects U.S. sales to fall; B class may come in 2011 Chevy plans new U.S. subcompact by '11 GM or Reynolds? Dealers must decide now Ralph Kisiel Ghosn: It's wrong time for a new partner GM geniuses turned their auto dreams into realities Dealers fresh out of Mini Coopers Chrysler, Ford, Honda top NAACP report card GM alters bonus for dealers who outperform their region Automakers angle for Chrysler's idle engine plant Chrysler revokes franchises in Pa. Sonic-Mercedes case could allow big dealers to add stores Buick's new LaCrosse It's still true: Product is king Still a bad idea NHTSA's Nason is leaving some big jobs undone Don't advertise them until they're on sale Safety matters much more than mpg Chrysler's no 'fuel economy laggard' $4 gas won't turn the U.S. into Europe For Europeans, America still spells opportunity Challenges travel with OnStar to China Personnel Mexico sales rise 1.2% in June Picture this Europe's worst sales result? Toyota Kia spends big to launch Borrego Kia launches Borrego just as SUVs lose favor Detroit 3: Goodbye, bailouts Dealers Eaton: Supercharger sales will grow Fla. appeals panel overturns class status in Kia brake suit Audi certified push pays off Used-car rule goes to the shop for tuneup Big-truck prices take a tumble in June Automaker tax break piggybacks on mortgage bill Honda rides high in 2nd-quarter rankings Ford Credit takes a hit as truck values fall 100 years of the Tin Lizzie Lamborghini profit soars AutoNation net income falls GM names CFO for N.A. TI Automotive unit will move Mercedes to cut Ala. production Fleming was a consummate newspaperman Toyota plans to raise Prius output A dart for Smart Tesla gets good reviews at Bentley 422 hp — and, uh, easy at the pump Ford's 2nd qtr: The reddest ink ever Bill Gates joins the car-dealer club Detroit 3 should put Mini under the microscope What's a Gov. to drive? Automotive News - July 28, 2008 Automotive News - July 28, 2008 - Hummer: Bonuses, buyouts (Page 1) Automotive News - July 28, 2008 - Hummer: Bonuses, buyouts (Page 2) Automotive News - July 28, 2008 - American Axle blames strike for big quarterly loss (Page 3) Automotive News - July 28, 2008 - GM or Reynolds? Dealers must decide now Ralph Kisiel (Page 4) Automotive News - July 28, 2008 - GM or Reynolds? Dealers must decide now Ralph Kisiel (Page 5) Automotive News - July 28, 2008 - GM alters bonus for dealers who outperform their region (Page 6) Automotive News - July 28, 2008 - GM alters bonus for dealers who outperform their region (Page 7) Automotive News - July 28, 2008 - Buick's new LaCrosse (Page 8) Automotive News - July 28, 2008 - Buick's new LaCrosse (Page 9) Automotive News - July 28, 2008 - Buick's new LaCrosse (Page 10) Automotive News - July 28, 2008 - Buick's new LaCrosse (Page 11) Automotive News - July 28, 2008 - Chrysler's no 'fuel economy laggard' (Page 12) Automotive News - July 28, 2008 - Chrysler's no 'fuel economy laggard' (Page 13) Automotive News - July 28, 2008 - For Europeans, America still spells opportunity (Page 14) Automotive News - July 28, 2008 - For Europeans, America still spells opportunity (Page 15) Automotive News - July 28, 2008 - Personnel (Page 16) Automotive News - July 28, 2008 - Personnel (Page 17) Automotive News - July 28, 2008 - Picture this (Page 18) Automotive News - July 28, 2008 - Picture this (Page 19) Automotive News - July 28, 2008 - Europe's worst sales result? Toyota (Page 20) Automotive News - July 28, 2008 - Europe's worst sales result? Toyota (Page 21) Automotive News - July 28, 2008 - Detroit 3: Goodbye, bailouts (Page 22) Automotive News - July 28, 2008 - Dealers (Page 23) Automotive News - July 28, 2008 - Fla. appeals panel overturns class status in Kia brake suit (Page 24) Automotive News - July 28, 2008 - Fla. appeals panel overturns class status in Kia brake suit (Page 25) Automotive News - July 28, 2008 - Big-truck prices take a tumble in June (Page 26) Automotive News - July 28, 2008 - Big-truck prices take a tumble in June (Page 27) Automotive News - July 28, 2008 - Big-truck prices take a tumble in June (Page 28) Automotive News - July 28, 2008 - Big-truck prices take a tumble in June (Page 29) Automotive News - July 28, 2008 - Big-truck prices take a tumble in June (Page 30) Automotive News - July 28, 2008 - Big-truck prices take a tumble in June (Page 31) Automotive News - July 28, 2008 - Big-truck prices take a tumble in June (Page 32) Automotive News - July 28, 2008 - Honda rides high in 2nd-quarter rankings (Page 33) Automotive News - July 28, 2008 - 100 years of the Tin Lizzie (Page 34) Automotive News - July 28, 2008 - Mercedes to cut Ala. production (Page 35) Automotive News - July 28, 2008 - Toyota plans to raise Prius output (Page 36) Automotive News - July 28, 2008 - Toyota plans to raise Prius output (Page 37) Automotive News - July 28, 2008 - What's a Gov. to drive? (Page 38) Automotive News - July 28, 2008 - What's a Gov. to drive? (Page 39) Automotive News - July 28, 2008 - What's a Gov. to drive? (Page 40) Automotive News - July 28, 2008 - What's a Gov. to drive? (Page 41) Automotive News - July 28, 2008 - What's a Gov. to drive? (Page 42)
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