Fuel prices alter automotive landscape

HIGH FUEL prices are altering the automotive landscape globally, creating both opportunities and threats for smaller players such as South Africa. In the United States, the prospect of paying $4/gallon for fuel has seen a 27% drop in sales of SUVs during the first half of 2008, according to PricewaterhouseCoopers. “The entire North American landscape is in the midst of an engine downsizing trend that is expected to accelerate throughout the next decade. As technologies like direct injection, super/ turbocharging, and transmission enhancements become more commonplace, displacement is expected to decline precipitously,” says the report. At their peak in 2004, Americans bought 4.7 million vehicles powered by V8 engines. However, V8 output is expected to plummet 45% to 2.7 million units by 2009. The switch to more fuelefficient cars in the US could create more opportunities for South African assemblers, which are all in the business of producing smaller cars. Toyota, Volkswagen, General Motors, BMW and Mercedes all have significant export projects in place.