As gas prices reach new altitudes, conventional wisdom has it that the heyday of big vehicles is over. Recent developments at the automakers seem to back up this notion -- but a new technology may make the eulogy for gigantic cars a bit premature.
General Motors (NYSE:GM) recently announced that it will discontinue the H1 Hummer, a giant SUV with a fuel efficiency of 10 miles per gallon. Ford (NYSE:F), meanwhile, reported earlier this month that truck and SUV sales in April were down 15% year over year. Meanwhile, consumers have flocked to Toyota's (NYSE:TM) popular Prius hybrid compact.
However, General Motors, DaimlerChrysler (NYSE:DCX), and BMW recently unveiled a new "two-mode" hybrid system that may change this dynamic by better accommodating Americans' tastes. The new technology holds particular promise for ailing giant GM.
Like Toyota's hybrid system, the consortium's technology uses electric motors to supplement a gasoline engine. In addition, the electric motors tend to take over at low speeds, and braking recharges batteries.
The new hybrid offering, though, represents an improvement over existing technology in boosting efficiency at higher speeds. It's also supposed to be particularly well-suited to bigger vehicles. The German-American consortium's new hybrid technology will be available in 2007 on GM's 2008 Chevrolet Tahoe SUV. GM expects the hybrid Tahoe will have 25% better mileage than the conventional model in combined city and highway driving.
In addition, the consortium's new system might not add as much to vehicle price tags as Toyota's hybrid option does to its offerings. The new hybrids will use "off-the-shelf" components, and manufacturing costs will be shared among the three companies.
This hybrid technology is particularly good news for General Motors. Big trucks and SUVs have fueled its profits, and consumers' ongoing shift away from jumbo-sized vehicles has gravely hurt the company. Even if the new system doesn't lead to a resurgence in GM's truck and SUV sales, it could help stem customers' exodus from the category. For GM, that alone would be cause for celebration.
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Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.
