10 Auto Industry predictions for 2007

2006 has been an interesting year for the automotive industry. I have a feeling that we’ll see some truly remarkable things in 2007, and I want it on record that I called it. So here’s my list of predictions for 2007.

Toyota will overtake Ford, then GM to become the largest automaker in the world

This is one that everyone has seem coming, but no one really wants to believe. Many think that Toyota will level out at number two, as if GM has some magic trick up their sleeve. They don’t, so ToMoCo will take the number one slot from them, and they will hold it for the foreseeable future.

Gas prices will skyrocket again

While it has been very very nice to enjoy ( reasonably ) low gas prices, at least compared to this past summer, it’s not realistic to expect them to stick around. Gas prices ( and of course, oil prices ) are very much driven by demand. Last time I checked, the demand for gas hasn’t been dropping. Don’t expect it to anytime soon either. That means gas prices will be on their way back up, and we should be prepared for it.

Hybrids will regain their lost popularity

Once gas prices came back down to earth, hybrids became more attainable. The waiting lists shrank, and the premiums over MSRP began to fade. It’s no longer entirely unrealistic to walk into a dealership, test-drive a hybrid, and purchase it that day for MSRP. With the expected gas price increase, expect hybrids ( though not the ‘performance’ variety ala Honda Accord Hybrid ) to begin to shine again. Get yours early.

Ford will part ways with Jaguar

This is something the Blue Oval has needed to do for a very, very long time. For whatever reason, Ford insists on keeping around this marque that just continues to bleed money year after year. If Ford can’t find someone willing to exchange cash for Jaguar, they should find someone willing to accept the burden. In other words, cut their losses and give the marque away. It’s better than continuing to add red ink to the bottom line each year.

Daimler-Chrysler will become Daimler-Benz and Chrysler, once more

Daimler-Benz made a devastating error when deciding to take over merge with Chrysler. As I have said for quite some time, Chrysler is the most troubled of the American automakers, even though for a long time they seemed the best off. Daimler-Benz is best to find a way to part ways with Chrysler, though it will be very difficult, and costly. Ultimately, it’s best to pay the price as soon as possible, cut their losses, and move on down the road. Well, best for Daimler-Benz, that is. Not so good for Chrysler.

Saab will continue to flounder

GM won’t sell off Saab. Yet, that is. For some reason, GM doesn’t want to admit that it made a mistake with Saab. For that reason, Saab will stick around, at least for another year. Bleeding red ink, and failing to be a meaningful brand.

Compact cars, not subcompact cars, will rule

Looking across most brands’ offerings, compact cars achieve similar, if not better, gas mileage when compared to their subcompact brethren. They also offer more space, comfort, and a higher level of safety. People will begin to shy away from the mini cars, and flock towards the slightly larger, small cars.

The full-size SUV market will continue to diminish

Not so long ago, full-size SUV’s were a niche vehicle. They served a specific need for people, and only the people who had those needs purchased one. Since then, of course, they have become a status symbol. The full-size SUV of today is a far cry from the one of 10 years ago – now you can get every luxury item imaginable. Even Lincoln and Cadillac have a full-size SUV in their lineup – who would have thought that? Now, with high gas prices looming over our heads, and the threat of global warming ever present, people are downsizing in record numbers. Instead of purchasing that Ford Expedition, maybe they go with an Explorer. People will skip the Suburban, and buy an Acadia. Increasingly, the large SUV is seen as a symbol of gluttony and excess, rather than status.

Hyundai will enjoy a strong sales increase

The increase will unfortunately be at the expense of the Big 2.5. Hyundai’s cars have been improving at fantastic speeds, and more people are taking notice. No longer is a Hyundai an unreliable, poorly made machine. Expect Hyundai to post big numbers in 2007. Kia, Hyundai’s sister brand, still carries a strong stigma of cheap and unreliable.

The year of the diesel

Will not be 2007. While some important steps are going to be made this year, with the low-sulfur fuel becoming available, and several manufacturer’s releasing 50-state emissions engines, we’ll definitely see more diesels on the road than in past years. The problem is the word diesel – most people are still afraid of it. When you mention diesel, many folks still think of a big honkin F-350 or Dodge 3500 pickup, with their massive, deafeningly loud diesel engines. As you and I know, this isn’t the case anymore. Diesel engines for commuter cars are nearly as quiet as gas engines, and they don’t have the horrid smell of the larger, older diesel engines.

Published on December 26, 2006 in Ponderings

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