Tipping point?

In an article in the 24 May 2008 Los Angeles Times Ford CEO Alan Mulally is quoted as saying that the automobile industry has “reached a tipping point” because of rising oil prices; a point that will fundamentally change the kinds of vehicles that consumers will buy. A similar article in the 24 May Financial Times describes a plan to drastically lower the emissions from cars in Europe. Specifically, “The average new car sold in the European Union in 2020 will have to use less fuel than almost all conventional models on the road today”.

Hello? Where has the industry been for the past three decades? After more than 30 years of complacency after the oil shock of 1973 the industry is suddenly panicked by the thought that we might actually be running out of oil and that oil prices will surely rise as the remaining oil is more expensively extracted. The triple whammy of oil depletion, increased competition from China and India, and global warming has indeed caught the world’s attention recently. Both of the articles cited above emphasize the changes in the mix of vehicles bought, not to mention the cars and trucks that are suddenly hard to sell.

Add to those woes the economic slowdown, the Cyclone in Burma and the earthquake in China. It never rains but it pours. What to do.

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