When banners, advertisements, and slogans fail, try pinching consumers' pockets and they'll behave the way you want them to. This has certainly proven to be the case with oil. For several years, environmentalists have tried to popularize the use of alternative sources of energy, but the response has been marginal.
However, the recent hike in oil prices coupled with several other economic factors seem to have got U.S. consumers started on their path to availing sustainable resources. Left with few choices, they are now opting to buy fuel-efficient cars and in bigger and bigger numbers. And fortunately for Detroit, American auto manufacturers are sitting pretty, ready to absorb this revitalized demand.
With oil constantly trading above $100, consumers -- particularly those looking to buy cars -- are vying for alternatives that aren't too heavy on their wallets. Although that's forced automakers to rework production strategies and turn to compacts, electric cars, and hybrids to boost sales, it has nonetheless translated into higher revenues. For example, these automakers saw their small car sales jump 18% as demand for fuel-efficient vehicles showed an uptrend. A shortage of parts and cars from quake-hit Japan appears to have propelled the sale of fuel-efficient cars even further.
Last month saw General Motors'
Automakers such as Ford Motors
Meanwhile, a resurgent U.S. auto industry has indirectly favored the largest manufacturer of aluminum wheels for cars, Superior Industries
As far as GM is concerned, I feel particularly bullish. Ever since it did more business in China than in the U.S. last year, GM seems to be viewing the Asian giant as a pot of gold at the end of the rainbow. Since China's trying to promote the use of electric vehicles through subsidies and other initiatives, GM has a very high chance of grabbing a fair share of the market there. This might be the ladder that could elevate GM to the pinnacle of the car manufacturing industry, replacing Toyota.
Toyota has been confronted with the fact that its sales are unlikely to improve until the end of this year. A stronger yen and declining dollar are shaving off its profits from U.S. sales even as the company comes to terms with limited production of strategic parts.
Like Toyota, Honda Motor
Foolish bottom line
As the once-dominant Japanese auto sector is trying to cope under the weight of pooled adverse situations, U.S. automakers are capitalizing on a near-monopolistic situation and nice tailwinds thanks to surging energy prices. If this trend continues, I believe American automakers might gradually regain control of the U.S. automobile market and continue to expand aggressively in overseas markets.
Debarati Bose does not have ownership of any of the company shares mentioned in this article. The Motley Fool owns shares of Ford Motor. Motley Fool newsletter services have recommended General Motors and Ford Motor. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.