$4-a-gallon gasoline to change focus and trends in the auto industry

Article by Christian A., on April 25, 2011

The $4-a-gallon gasoline is said to have changed the focus and the trend in the industry. According to John Krafcik, chief executive officer of Hyundai Motor America, there are major segment shifts happening in the industry.

He pointed out that the most visible change is the consumer preference from the mid-sized vehicles to the compact ones. He further stated that the small models will outperform the midsized ones and will comprise the largest retail-sales segment in 2011. He forecasted that there may have been a shift of 2 to 3 percentage points, around about 300,000 to 400,000 units, from one segment to the other.

During the motor show in New York, Kia and Mazda entered the 40-mpg club, as they launched their production vehicles that are estimated to get 40 mpg in highway driving. Hyundai had recently showcased its third 40-miler.

Ford Motor Co. launched a huge 2013 Taurus sedan, which produces 31 mpg with the help of a four-cylinder engine. On the other hand, Chevrolet showed its 38-mpg 2013 Malibu Eco to counter Ford’s sedan. However, the high oil prices affect more than just the mpg of the vehicles.

According to Ford’s president of the Americas, Mark Fields, his company is taking action to reduce shipping costs. He added that the company may have to take further cost-cutting measures or increase prices due to the high commodity prices.

As of the moment, Ford is not considering switching to other component suppliers to reduce expenses on shipping. However, if the price of gasoline remains high, the company will consider switching to low-cost local suppliers as current contracts expire.

Topics: united states

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