Green cars -- if that adjective can be applied to any car -- are going to have a huge advantage in the global automobile market, according to the World Resources Institute (WRI), a respected, Washington-based environmental research organization.
WRI's analysis of automobile technologies and markets shows the Big Three American automakers -- GM, Ford and DaimlerChrysler -- are seriously out of sync with overseas markets, where greener, fuel efficient vehicles are in demand. (They may even be out of sync with the American market: Toyota -- considered the greenest automaker overall -- recently surpassed DaimlerChrysler in U.S. auto sales.)
The problem is the Big Three have geared their technology to the American market, an anomalous island of gas guzzlers in an ocean of fuel efficiency. Gas and diesel prices are high almost everywhere in the world, except the U.S., which also has scandalously inadequate emission standards. And while European and other countries like Canada have embraced the Kyoto Protocol to control climate change and called for lower auto emissions, the U.S. has its head in the sand.
These factors threaten the global position of the U.S. automakers.
Europe, Japan and several other markets, where environmental protection is emphasized, are already buying smaller, efficient vehicles. The European Union has pressured the industry into committing to make passenger vehicles that get an average 39 miles per U.S. gallon by 2008, whereas the U.S. commitment is just 27.5 mpg for cars and 22.2 mpg for light trucks and SUVs.
But it is the developing countries that are emerging as the major market for cars, and these countries want small, efficient vehicles. In 2000, developing countries bought 24 per cent of the world's new vehicles; by 2020, it is expected they will buy 50 per cent.
Most Japanese and European auto manufacturers have spent the last decade developing cleaner cars, powered by gasoline-electric hybrids or clean-burning diesel. Toyota and Honda are already marketing hybrid cars with outstanding gas mileage, and their hybrid engines will be available in a larger number of models in the next few years. Japanese and European competitors are therefore well positioned to step ahead of Detroit in emerging markets.
China is perhaps the best example of an emerging car market. While just one per cent of the population now owns a car, rising incomes and a population base of 1.2 billion are creating a huge market. However, China has a relatively small supply of domestic oil and is already a net importer. Low incomes (about $1,300 per person), high population densities and crowded cities will steer consumers toward smaller, more efficient vehicles. And China, with some of the most polluted cities in the world, has set a goal of matching European vehicle emission standards by 2010.
As WRI puts it, market conditions in China are hardly conducive to significant sales of Hummers and Expeditions. Instead, the Japanese and European companies that have been forced to innovate around fuel efficiency and smaller vehicles in their domestic markets will be likely to fare best.
All this adds to the growing evidence that green technologies are becoming, in many cases, the most competitive and profitable.
Even in Canada, a market for greener vehicles is emerging.
Canadian officials have said that Canada cannot have stronger fuel efficiency and emission standards for vehicles than the U.S. due to the small size of our domestic market. They argue that we can't expect to have greener cars built especially for our market, simply because it is too small.
It is interesting, however, that Toyota introduced its Echo Hatchback model in Canada and not the U.S. Toyota's Echo is the greenest car on the market, excluding the more expensive hybrid models. It is a low emission vehicle (LEV) and gets around 55 mpg (Imperial).
By the way, WRI's analysis of the auto industry found that Toyota has the strongest "management quality score" regarding lower-carbon auto technologies. It has a strong position in the three green technologies likely to confer competitive advantage in a global market: fuel-efficient conventional vehicles (like the Echo), gas-electric hybrids (like the Prius), and hydrogen fuel-cell vehicles.
Author: Sam Maxwell
