Gas prices continue to ruin sales in the Auto Industry

According to a recent report in New York Times, as gas prices rise to $100 a barrel, sales in auto industry fell by 10 percent last month. The data on the sales also indicates that Honda is the only manufacturer company that have experienced an increased in their sales as compare to Ferbruary of 2007. The increase accounted for only 0.7 percent. While Honda and other Japanese manufacturers like Toyota continue to sell automobiles at an increasing rate each month, American manufacturers like Chrysler and General Motors experienced a double digit decline in their sales.
Most of the vehicles that these American companies manufacture include sport utility and heavy SUVs that use alot of gas in its engine funcitons. And as the gas prices climb, it is becoming more unaffordable for people to continue to drive such vehicles. So majority of the car owners are switching their tastes towards small compact car or hybrid cars that use battery power to keep its engine functioning. These cars can be very good for our environment because they would result into less pollution and more hands towards fighting or reducing the effects of global warming.
The management decision that are facing these car companies are to whether to shut down or downsize their projects of manufacturing more SUVs, and invest more money into manufacture small compact cars to continue to compete with Japanese manufacturers. The main force driving their decision is that most of thr revenue earned by American manufacturers is through the sales of these large SUVs. They believe the sales of thousands of these small compact cars would only equal sales of several hundred SUVs. They should consider re-evaluating their strategy and broaden their perspective to continue to make more sales. They can consider manufacturing these compact until gas prices become more stable or some other effective method is imposed. This way they would continue to generate enough sales to remain competitive.
The question that also arises from this situation is that why Japanese manufacturers are not facing the similar dilemmas? The answer is good strategic thinking. They were able to visualize the demand of small compact and hybrid cars, way beyond time, so they started to design and manufacture vehicles with such qualities years before this problem became prominent. Today, the demand of these vehicles is rising constantly, and they are taking good advantage by fulfilling these demands, while others manufacturers like General Motors are looking for ways to remain in business.
Let look at the future of just New York City, people have started to rely more and more on subway and other means of public transportation. City is planning on impose on toll on entering thorugh bridges and tunnels. Another important step City is taking is restricting the future use of Ford Crown Victoria to be used as Taxi. The city has already decided that following September, only Hybrid vehicles would be used as Taxi. So what we can see from this is that with in few years, they are going to be more hybrid vehicles in city than any other car. I think City has taken excellent steps to fight with rising Gas prices in return not just helping the consumers but also the society at large. Hopefully, combined efforts by all would bring promising results.

Work Cited,
Bunkley, Nick, "Vehicles Sales Fell by 10% Last Month" New York Times, March 4, 2008.