The gasoline engine isn’t dead yet
May 28th, 2008It is often repeated that selling small cars in the USA isn’t profitable. That is why the Big Three have dug themselves into a hole designing and building large vehicles that can no longer sell in this era of $4/gallon gasoline.
Gas-electric hybrids have become very popular. Here, in California, they are flying off the lots. Toyota, in particular, have become the hybrid brand. In a twist of irony, Honda had to abandon its own hybrid version of the Accord due to slow sales: it could not compete against Toyata’s hybrids.
Small fuel-efficient cars are also suddenly very popular. Ford, for example, has been touting the MP3+MPG aspects of the Focus. As a result, that car is now more popular than ever, in spite of a very ugly redesign.
So are gasoline engines on the way out?
I would say: not yet.
In the past, car manufacturers have positioned small cars as low cost, no frills, minimum transportation. The BMW Mini changed that by focusing on style, heritage and drivability. However, I believe that sky-rocketing gas costs will further change how manufacturers position small cars.
For example, small cars can be positioned as extremely fuel-efficient transportation. And consumers, fearful of what next year’s fuel prices are going to be like, will be willing to pay extra for the fuel efficiency. Perhaps not as much as the $3K or more premium of today’s hybrids but certainly some kind of premium: enough to make small cars profitable.
Positioning is useless without the capability to back it up. And here is where manufacturers can focus their R&D resources.
I see some of it already happening. For example, GM is introducing a new 6-speed transmission that will be coupled to a 4-cylinder engine in the Malibu LTZ. Ford is doing the same for the new Escape SUV. A 4-cylinder engine by itself is great for fuel efficiency. A 6-speed transmission will make sure that the engine always runs in its best power band so that there will be no perception of lack of power.
I don’t see why this cannot be done for the small cars from these two companies. The transmissions cost more. But remember, consumers appear to be willing to pay more for better efficiency.
Some companies like Nissan have tried CVT transmissions which are even more efficient than 6-speeds. However, there is still some reluctance to embrace new technologies like this. Even hybrids are struggling against this: questions about the durability of the batteries, the ability to do long road trips etc.
6-speed transmissions, on the other hand, are an easier sell: 6 being bigger than 4!
Manufacturers can also focus on new technologies to enhance the efficiency of automatic transmissions. Manual transmissions tend to be more efficient because of mechanical couple between the engine and the wheels. Automatic transmissions use hydraulic fluid to transfer mechanical energy and some of that energy is lost in heat. Making automatics approach manuals in energy transfer will also improve mileage.
Hopefully, in a couple years, small cars will be well-equipped like today’s mid-size cars and offer the mileage of today’s hybrids while using traditional but vastly-improved gasoline engine technology. I am sure that consumers will pay for them.
EDIT: The LA Times had an article about how consumers were buying more 4-cylinder vehicles. The article also noted that modern 4-cylinder equipped cars no longer struggled with the lack of power. With better 6-speed automatics, 4-cylinder cars should do even better.
