The Road Ahead

Whenever I'm asked what the future of the automobile and the automotive industry will be like, which is increasingly often, I always say the same thing. I quote Yogi Berra. The ultra-quotable American baseball legend once said, and quite rightly, I think: "It's tough to make predictions, especially about the future." And then, despite how tough it is, I will typically go on and try to answer the question anyway. So since NEWSWEEK asked, I'll bite. One thing is certain: the landscape of automotive transportation will be markedly different decades from now than it is today. You won't even recognize it. And the key components driving the differences are proportion and propulsion.

I'll start with proportion, because that is the theme of this issue, "Small Is Big." But I'm not going to join the chorus of voices shouting that small cars are taking over the world. Most surely, the market for small cars is growing globally, because of fuel prices, congested urban driving and the advent of automobiles in mass quantities in developing countries, what the industry calls "opportunity markets."

The truth is that a dichotomy is developing in the global small-car market. In developed, mature markets such as Europe, Japan, Australia and North America, customers expect and will pay a premium for a certain level of safety, efficiency, emission control and technological sophistication in their vehicles, even the smallest ones. The market demands features like multiple airbags, antilock braking systems, traction control, entertainment and power everything.

In other parts of the world, including markets where some people are buying cars for the first time, a different type of small car is developed, one lacking many of those aforementioned features. And that explains the very low costs of some of these vehicles.

To be successful, a company has to be prepared to address both types of market, and at GM we are. Our partners around the world such as Wuling in China, and our own global brands like Chevrolet, will help us do just that. We plan to compete aggressively in the brave new small car world.

But that doesn't mean there will be a small-car craze that will envelop a market like the United States. Certainly, impending Corporate Average Fuel Economy (CAFE) regulatory changes will affect the composition of the U.S. fleet. I'm a believer, however, in research that suggests the U.S. fleet won't come to resemble what's on European roads until fuel prices climb well above $10 per gallon. Until then, there will be a place for all types of vehicles in the market, even as the volumes change.