The Hindu : Business : High gas prices necessitate fuel-efficient cars

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Wednesday, Sep 14, 2005

Business

Business

High gas prices necessitate fuel-efficient cars

Styling and economy to lure customers

FRANKFURT: GERMANY: With high gas prices forcing consumers to fork over fistfuls of euros, dollars and yen to power their cars, automakers see an opportunity not only to produce more fuel-efficient cars, but also grab important market share in the process.

Across the hundreds of displays and booths at the Frankfurt auto show, the smaller, more fuel-efficient cars from France's Renault SA, South Korea's Kia and Hyundai and even China's Geely Holding Group are drawing more attention and questions.

That's no surprise, analysts say, since smaller cars like Fiat's Panda and Renault's Clio can get more mileage out of a litre of gas than a larger Mercedes or Range Rover.

In the European Union last year, small cars accounted for 33.4 per cent of the entire market, up from 30.4 per cent in 1990, according to the European Automobile Manufacturers Association.

Now with companies like BMW, which sells the reborn Mini, and DaimlerChrysler, which has the Smart forTwo, seeking to expand the market, automakers can rely on better styling as well as economy to lure customers to small cars.

Mini, for example, unveiled a slightly longer version of its flagship model, with more space in the back and a back-door entry akin to a larger SUV, without sacrificing sportiness or economy.

Skoda, owned by Volkswagen AG, unveiled its compact convertible SUV-style Yeti this week, with company officials saying the funky four-door could go into production in a bid to meet demand. Skoda CEO Detlef Wittig said demand for the company's small cars is expected to push 2005 sales up 10 per cent to 4.85 lakh.

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