Renault, Peugeot, Honda, Opel, others deliver good car value in Europe

Implications: Elisabeth Rosenthal in Rome reported in the August 30-31 issue of the International Herald Tribune that Europeans are willing to pay the current high cost of driving. High fuel prices alone may not deter drivers. Some people are driving less and gasoline purchases in Italy have fallen by 10% from a year ago. But few signs of a wholesale change in habits have emerged. Consumers are willing to economize in vacations, movies and gifts but they still like to drive their cars. Changes in the types of vehicles purchased have been seen. New car sales in Europe have dropped this year. But European cars are far more fuel efficient than those sold in the U.S. The average car gets 100 kilometers for 6 liters of fuel, twice the U.S. average. The auto industry is investing in further improvement of fuel efficiency but design changes will take five years. To change driving habits, high prices have to be coupled with policies which include improvements in public transport.

Analysis:  Inexpensive European models run from about €13,000 to €20,000. All of them get high mileage. Fuel tanks hold about 30 liters, enough to drive 500 kilometers. Expressways cover Europe from north to south and east to west. Distances between service stations is posted along the highways so the driver can minimize stops. Getting around is easy. In most large cities, Paris, London, Madrid and Lisbon, well developed Metro systems coupled with above ground buses make getting around fast and inexpensive. People of all ages use motor scooters to commute to work. Others ride bicycles. Many walk. With city travel made economical this way, consumers have more money to spend on gasoline or diesel (Many cars in Europe are diesels and the trend is growing). Still, it is clear that high fuel prices for transportation, home heating and utilities is having a general effect in Europe. Economies are slowing down. Food prices have risen as the transportation component has risen. Like in the U.S. and in much of Asia, consumers are cautious and pay close attention to budgets. Thriftiness, always important to most Europeans, is approaching stinginess. Another factor in this equation is the increasing use of compressed natural gas vehicles. Enough service stations for these cars exist to allow international travel. An initiative which may encourage the compressed natural gas vehicle market is a new multidiscipline task force organized to map out gas shale deposits in Europe. The six year program called Gas Shales in Focus begins in January 2009. Its focus will be the prediction of European gas shale loations gas shales and their potential performance