"The future of the auto industry is on display at the Paris Auto Show, and the future is now," he said, gesturing to nearby vehicles so enthusiastically that he threatened to knock a window out of the little two-door Ka.
"The requirements of customers around the world are coalescing," Mulally said. "They want quality and fuel efficiency with no compromise on comfort and performance.
"That's the world we live in."
Mulally speaks for an entire industry that believes Americans are ready to buy more small cars -- and pay more for them -- than ever before.
For decades, American and European automotive tastes have diverged. Americans reveled in cheap gas prices and big vehicles with big engines. Europeans, who have lived with $4-a-gallon gas for years -- at times paying twice that much -- built stylish, fuel-efficient little cars that offered more comfort and features than those the Detroit Three derided as econoboxes.
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Striking a balance
But even in the face of rising gas prices and fuel-economy requirements, some analysts question how big Americans' taste for small cars will be. Simply put: Demand may not grow as much as the automakers expect.
"There's a history of knee-jerk reactions to oil crises," said analyst Rebecca Lindland of Global Insight in Lexington, Mass. "When gas prices stabilize, we may see a return to midsize vehicles. There's a risk manufacturers may overcorrect and find themselves with too many small cars."
General Motors Corp. and Ford both unveiled key players in their future lineups of global small cars in Paris this week. They already build excellent small cars in Europe and appear committed to making their U.S. models just as good. That would be a major change. The automakers' U.S. operations traditionally treated small cars as money-losers they had to build to meet government fuel economy decrees. Built cheap to sell cheap, they could not compete with desirable little cars, like the Honda Civic.
GM and Ford both need to make money on small cars now to offset income lost when sales of profitable trucks and SUVs plummeted. To do that, they'll offer style, comfort, advanced features and high fuel economy.
Ford mum on U.S. Ka plan
The Ka, which Ford developed with Italian automaker Fiat, replaces a popular model that sold 1.5 million cars over its lifetime. No one at Ford will give a hint as to whether they will sell the Ka in the United States, but the company is considering whether it may need a car priced below the Fiesta subcompact it will sell in 2010.
Ford also will launch the next generation of its European Focus compact in the United States in 2010. Between the Fiesta, Focus and other vehicles based on them, Ford will have an unprecedented four North American assembly plants dedicated to building small cars for the United States.
"We are reinventing how Ford Motor Co. does things," said Marin Burela, who oversaw development of the Fiesta and Ka. In addition to the Fiesta and Focus, look for the Ford plants to build a wide range of small vehicles, including models like the sporty Kuga crossover and C-Max minivan.
"The small-car segment is now moving to offer comfort and handling that are as good as big, expensive cars," said Gunnar Hermann, Ford's global compact-vehicle boss and chief of the Focus development team.
Chevy Cruze offers more
GM hasn't committed to building any subcompacts in North America, but it put the full power of its global engineering and design behind the Chevrolet Cruze compact sedan that debuted in Paris last week.
The roomy and attractive Cruze will offer more passenger space and better fuel economy than any compact on the road when it goes on sale in spring 2010, GM promised. The Cruze will replace the Chevrolet Cobalt, an efficient but excruciatingly dull car that failed to do much for Chevrolet's image or GM's income statement.
Chrysler, which lacks in-house European small-car expertise, has tapped the Franco-Japanese partnership of Renault-Nissan for the engineering of its upcoming subcompact. The Dodge Hornet will mate Chrysler styling to the mechanical underpinnings developed for the Nissan Versa and Renault Clio.
Small cars, big profit?
"The American companies will need to make money on these cars," said Joe Phillippi. "They've got to get a higher price for them."
That may not translate into a big jump in sticker prices vs. the current Focus and Cobalt, but the automakers must sell the cars without incentives, and with higher levels of standard and optional equipment.
The 2008 Chevrolet Malibu is the template for what GM and Ford hope to accomplish. Its sticker price increased modestly from the previous model, but customers fell in love with the car and loaded on the options. The average price a Malibu sells for shot up $4,000, and GM raked in the profits.
If the new generation of Euro-bred small cars approaches that level of success, it will be because the future of the American small car debuted at the 2008 Paris Auto Show.
source:freep
