For auto giants General Motors Corp. and Ford Motor Co., racked by billion-dollar losses and slumping market share in the U.S., that milestone represents the potential for growth and a rare cause for optimism. But it also represents a huge challenge for the automakers — as well as regulators, environmentalists and ordinary people trying to get from place to place.
The auto boom will only add to the congestion in major cities, as well as deepening the world¹s thirst for petroleum and spewing even more carbon dioxide into the air. That will leave drivers facing rising costs and traffic headaches, and force the auto industry to deal with rising demands for fuel efficiency, pollution control and a host of other rules and regulations. For instance, worried that the European landscape will be littered with junked cars, the European Parliament has demanded that automakers devise ways to recycle and reuse 95 percent of the weight of a vehicle by 2015.
Longer term, the struggle to accommodate 1 billion autos on the planet may lead to a rethinking of the car¹s place in society.
Automobiles have long been symbols of personal freedom. They¹ve enabled people to live in the country and earn better wages in town. Automakers have enjoyed special status as national industrial champions, protected to some degree from competition in return for providing high-paying jobs on a mass scale.
The view of cars as a symbol of all that¹s right in the economy and society still holds a lot of power, especially in developing countries. In India, car sales are booming. Automakers are ramping up production as the government loosens restrictions on foreign automakers and increases spending on roads to meet the demands of an increasingly affluent middle class. China is engaged in a massive road-building campaign to accommodate the surge in privately owned vehicles. Chinese automakers are talking up ambitious plans to crack the U.S. market with their cars within two years.
There¹s a perception the industry is stagnant,says Paul Ballew, executive director of market and industry analysis at GM. In reality, Ballew says, the auto industry¹s challenge in coming years will be managing growth.
At the same time, governments and automakers are beginning to demonstrate some concern that too many cars could be too much of a good thing.
In London, the city government has imposed a tax on cars entering the center of the city in an effort to encourage commuters to use mass transit. Other cities around the world are considering similar policies to ease congestion. The impetus for limiting traffic isn¹t coming just from environmentalists. The Partnership for New York, a business group, has urged the city to consider a congestion tax similar to London¹s, among other measures, to ease the city¹s gridlock.
We have a serious problem with lost productivity in our economy that costs the New York metro area $6 billion a year, says Kathryn Wilde, president and chief executive officer of the partnership.
The auto industry also faces a renewed challenge to make vehicles that burn less petroleum for both environmental and political reasons. And it seems likely the industry will deliver.
Toyota Motor Corp. scored a coup in the U.S. market with its highly efficient Toyota Prius gasoline-electric hybrid, a distinctively designed car that has become a green status symbol. Toyota is pushing gas-electric hybrid technology, in various forms, across an array of its vehicles, from a high-performance Lexus luxury sedan to crossover SUVs to its best-selling model, the Toyota Camry.
Ford, which racked up record profits during the 1990s by selling SUVs, is charting a new course under Chairman and Chief Executive William Clay Ford Jr. The company has cut back its SUV-making capacity and, despite slumping profits, has pumped money into developing its own hybrid-vehicle technology.