Small car wars

A couple of years ago (actually four) we visited with a potential automotive client, and during our conversations argued that they needed to speed up their small car programs and get to market faster. Normally the product development cycle is at least six years, but in this case the client had vehicles around the world that would fit the North American market well with minor tweaks easily accomplished over a 12-24 month period. The client did not take our advice as seriously as we wanted (they did not hire us at the time).

I met with them again last week, to talk about something else – namely: “How do you help consumers imagine a future that is vastly different than today?” During that meeting the most senior person on their team brought up the meeting four years earlier and said: “I remember four years ago you pointed out that we should focus more on small cars – how did you have that foresight?” It is always nice when clients (and potential clients) commend you for past predictions that have played out as you said they would.

So after saying “thank you!” I explained that the reason small cars made sense then (and now) is that, as American’s go from having 2.1 vehicles per household to closer to three, that third vehicle will be a smaller commuter, grocery, soccer practice (if you do not carpool), and/or dinner date kind of car. It is not only because of gasoline prices that small cars make sense. There is actually great utility in them when you have already covered your other needs with the two other cars in your garage.

Gasoline prices will continue to fluctuate, and probably upward more than downward, and so the small vehicles in the carpool will be used more, and the big cars are still needed… but they just will be driven a little less. Overall mileage will continue to increase. American driving habits over the long run will not change – we still need to get around.

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