The Puzzles Facing the Car Industry – Oil Prices and Consumer Biases
By Martin Swig Car selling requires a long-term strategy. Consider Hyundai. In their first ten years in the U.S. they wandered all over the map. They then “idled” for about five years. Finally they found a sound strategy and produced a succession of very good cars. At long last they are recognized as a major producer of very desirable cars. Reputation: UP. Resale value: UP. Dealers: TOP NOTCH. Sales: SKYROCKETING. A track record like that requires a good strategy, good execution and good forecasting.
Today, we have governments demanding electric cars, consumers being primed to want them to reduce our dependence on oil. So far electrics have less than 1% of the market. But what if oil is actually plentiful, as some experts are beginning to believe. Citing huge reserves in Alberta and North Dakota, and recent discoveries in Brazil that may exceed the reserves in Saudi Arabia, these sources suggest that oil prices could decline precipitously. If that happened, demand for electrics and hybrids would likely collapse, wiping out the considerable investment in them.
Remember the Chevy Vega, Plymouth Horizon and Dodge Omni?
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