The Car File

Expect The Unexpected

The rise in global crude prices may not be a bad thing for everyone. In the US, where gas prices have risen from little over a dollar in 2001 to over $4 now, people are leaving their trucks and SUVs at home and taking buses and trains to work. And big GM and Ford vehicles have lost sales to smaller, more frugal cars. No amount of global warming warnings could have done the trick that expensive oil has achieved.
In India, too, the sooner the government passes on the load, the earlier we will see the shift towards economy, although it will not be as stark as in the US. This is a story that has repeated itself with every oil shock: 1959, 1973, 1980, 1990, and, finally, now.
Leading up to each of these, vehicles have bulked up and then gone out of the market, sometimes taking entire companies with them. That has made way for those with economy in sharp focus.
Oil shocks spell tectonic shifts in the auto landscape. The 1959 shock spelt doom for big European cars. In 1973 the US Big Three were so unprepared that for the first time Japanese cars such as Toyota and Nissan could get a toehold in their own backyard.
This time around, the technology shift is not likely to be large as tough emission norms have pushed manufacturers almost to the limit of efficiency. But when the market shifts towards smaller cars this time, as always, the game could shift to India. Ratan Tata did not build the Nano in anticipation of an oil shock, but he is likely to get big help from it. More so if it can squeeze a few more kilometres out of a litre of petrol—the expected 20-odd km/l may not give it enough of an edge. But add a few more, and Tata could well change the global game once and for all. This time he is the one with the first-mover advantage.