Cars, gasoline, transport and the future #futurism #cars

It's easy to say that the car market is changing - there are some obvious forces at play. Most clearly we see the pending collapse of the US-owned auto-makers, GM, Ford and Chrysler. In truth it's been a long-time coming and, indeed, it hasn't happened yet. They may be rescued, for example. FIAT may indeed buy Chrysler, or some other deal may arise. GM may cut/sell-off enough arms and legs that it can scrape by, as could Ford. And various governments around the world may stump up more direct cash or indirect subsidies to keep these dinosaurs and their local offshoots alive.

But there's more afoot here - even Toyota reports bad times in the car trade. So let's dig deeper. What is happening here and what can we expect in the future?

• Fuel prices have demonstrated greater volatility, scaring the market out of larger, heavier, faster or potentially riskier purchases
• Awareness has risen in the marketplace, of peak oil and climate change especially, dampening enthusiasm for cars in general and larger, thirstier cars especially
• Global financial collapse has threatened the ongoing provision of capital for the makers and dampened the desire and available cash flow of the consumer
• The rise of developing nations and their car makers has shifted the global focus towards low-impact, affordable cars

It's the last point that really grabs my thoughts right now. In some ways it answers, at least partially, some of the other points, too. By shifting production to smaller, less complex vehicles we not only meet the demand for personal transportation and open up economic possibilities for people in developing countries, we provide renewed competition for established makers in the developed world. It shakes things up and creates hope for greater innovation in addressing both alternative fuel sources and climate change. The fact that lower-cost cars use fewer resources will be an important change in an industry that has arguably become fat, lazy and complacent on a long-term diet of cheap oil. However the downside to opening up new markets is that any growth in manufacturing will increase pressure on our available resources and potentially lead to additional pollution, be it carbon or other wastes. It will also put pressure on public transport to offer effective competition, or to decline, as it has in much of the developed world.

The negatives are obvious, but we also have some positive forces at work here, including a push towards smaller cars with less impact overall, and more flexibility in fuel options. So what have we got in terms of lower-impact, lower-cost cars in the pipeline? The Indian Tata Nano is an obvious one, and from the same locale is the petrol/LPG Suzuki-Maruti 800. We also have the Romanian Renault, the Dacia Logan; the Fiat 178 project's offshoot, produced in several countries - the Palio, with an electric version mooted; and offerings from Russia's Lada. Plus there's Renault-Nissan working with Bajaj on a Tata Nano competitor, and further developments in China.

The flavour here is small, efficient cars with flexible powertrains. Some with the backing of existing large auto-makers such as Renault, FIAT and Suzuki, others based on what has been learnt from previous licensing deals and/or the production of so-called "legacy" or obsolete cars.

Paramount in meeting the developing world's demand for cars is low cost. The consumer will expect - and probably can only afford - a low purchase price with equally low running costs. That means manufacturers will need to scale up volume whilst driving down costs. Margins will be small. There's little room here for complacent "old school" car makers. Yes, they can continue to feast on the wealthy nations and their taste for over-large, over-insulated and overweight vehicles, but not joining in and competing will see these lower-cost makers taking more and more market-share over time. Eventually the penny will drop.

What can we expect to see over the next 10-15 years? There are no guarantees, but there is clearly an emerging market for smaller cars with flexible engine and fuel options, and it's an opportunity that will be addressed by the companies most eager to adapt. Lower-cost cars will gain traction and spread, with exports likely from countries such as China, India and Brazil, to name but 3. A second wave may come from other Asian and South American countries with African production ramping up as well. As these producers gain share existing small-car makers such as Hyundai and Suzuki will join in, as will the more agile of the "old school" makers such as VW, FIAT and Toyota. However many of these companies, and certainly the less flexible makers such as GM and Ford, will find it tough to adapt to this ultra-low-cost environment and will look to premium brands for salvation. Whether there will be enough room on that shrinking island remains to be seen.

We also cannot discount other disruptive entrants into the market. As cars are forced into a better balance with public transport and electric cars gain momentum there is an opportunity also for companies outside of the car-making game to come into play. Whilst hydrogen and fuel cells are largely discounted as power sources in the immediate future, they too may well gain ground as new possibilities emerge. And the very concept of personal transport could be threatened by new forms of flexible, lower-cost public transport. Both heavy and light rail solutions may continue to decline and be replaced by loosely-coupled personal transport modules that forsake some of their "freedom" for a degree of shared infrastructure and scheduling. Combined with electronic control of roadways (using GPS and RFIDs, for example) personal cars of the future may offer a new form of "train" that services wider areas by road rather than inflexible fixed rail. Whilst it may be difficult to imagine the current car owner giving up some of their current freedom to move at will, the sheer volume of cars on the roads and the likelihood of traffic gridlock will compel governments to consider a transition of some sort.