With higher gas prices shocking SUV owners at the pump, some folks are downsizing. Should the trend continue, American manufacturers are prepared.

Samuel Bodman, U.S. Energy Secretary, warned just last week that high energy costs exacerbated by Hurricanes Katrina and Rita could persist for several years, according to a news item from the Financial Times. Bodman told a meeting of reporters: “Both oil and natural gas availability have been severely impaired and the effects of this will reverberate through the economy of this country for some time. The main thing that U.S. citizens can do is conserve. We simply have to do it.”

Even though Europeans and Canadians, for example, have been paying considerably more for gasoline for decades, $3+/gallon at the pump is apparently helping motivate Americans not to super-size our vehicles, but downsize them. The new trend has even hit — God forbid — Texas, according to a BusinessWeek Online article. ‘It has come to this: even Texans are having second thoughts about their big trucks. In Fort Worth, deep in the heart of truck country, the Mortiz Kia used-car lot is packed with big sport-utes and minivans that buyers have traded in for cars that look pint-size by comparison, including the Sportage small SUV and Spectra compact.”

BusinessWeek says the motivation goes beyond the “north of $70″ fill-up for a large SUV, to “a fresh crop of little cars” that’s making small cool again. With SUV sales off 33 percent in September, sales of the compact yet “boldly styled” Mazda 3 are up 45 percent — and, overall, sales of small cars was up 23 percent.

There’s more to the story, however. SUV values have plummeted in some areas. According to this article in the New Hampshire Union Leader, “‘We’re seeing $30,000 SUVs that are two years old not even being worth $15,000,’ said Chris Markie of Seacoast Volkswagen in Portsmouth.” Even with reduced resale, the article suggests that SUV owners could be throwing away thousands of dollars of equity to make the switch — dollars that could buy a lot of gas. With a “big, heavy and safe” SUV’s ability to handle winter weather well, another dealer says, “Don’t be foolish. If you can hold onto it for now, winter’s coming and that will change things again.”

Another factor potentially limiting the move to fuel efficiency is the general lack of incentives for such high-demand offerings. “Some Toyota dealers are reporting as long as a six-month wait for the hybrid Prius, and most Volkswagen dealers are sold out of their diesel Jettas and Passats.” Remember, that’s in New Hampshire.

American manufacturers don’t even have much — if any — catching up to do, except perhaps in marketing and styling. They’re ready, according to another article from BusinessWeek Online. “Truth is, Detroit has some good passenger cars that boast quality and fuel economy that beat some Toyota models. But many consumers don’t know it — and plenty of them don’t care. American models are in many cases just as good — but have not leapfrogged the likes of Toyota and Honda with enough styling and technology to make loyal Japanese owners go domestic.”

The Big 3 all have bragging rights when it comes to fuel efficiciency. “GM’s powertrain engineers,” the article continues, “may be the best in the industry when it comes to wringing better fuel numbers out of even the oldest engines. ‘We’re exceptionally good on fuel economy and exceptionally good on value,’ says Paul Ballew, GM’s executive director of global market and industry analysis. ‘Do we need to get that message out? Yes, we do.’”

Engineers: 2, Marketers: 1.

Resources

High Fuel Prices to Persist Says U.S. Energy Chief
http://news.ft.com/cms/s/1a293db4-35d2-11da-903d-00000e2511c8.html

Detroit: Suddenly, Small Is Beautiful
http://www.businessweek.com/bwdaily/dnflash/oct2005/nf2005106_7775_db016.htm?campaign_id=topStories_ssi_5

Blow Your Horn, Detroit
http://www.businessweek.com/innovate/content/oct2005/id20051006_491393.htm?campaign_id=hp_views&campaign_creative=david%20welch