There were two reports that I recently read that left me puzzled. And for those of you who get all overheated when people start dealing with global climate change, you might stop reading now lest you become all agitated, thereby increasing your blood pressure, which gives rise to heat, which might give rise to localized global warming.
There was a analyst note from the PricewaterhouseCoopers (pwc.com) Automotive Institute regarding the "Super Premium Segment" and the "high net worth individuals" (a.k.a., at least by those in the know, as HNWI) who buy them. The note, by Michael J. Gartside, observed that at the 2009 Frankfurt Motor Show, not only was there an array of environmentally oriented vehicles, but a veritable forecourt's worth of cars with window stickers (I wonder if these types of cars actually have something so, well, pedestrian affixed to their glass) starting at £100,000 (round about $162,000, give or take a few grand) Cars like the Ferrari 458 Italia, McLaren MP4-12C, Mercedes SLS, Bentley Mulsanne, and Aston Martin Rapide. Cars that most of us are likely to see only at auto shows or in photographs.
Gartside notes that while the introduction of such vehicles "may seem perverse in the current downturn," going forward there is a whole lot of upside for these cars, particularly in the BRIC (Brazil, Russia, India, China) region. According to CapGemini & Merrill Lynch World Wealth Reports, Gartside points out, the number of HNWIs in the BRIC markets doubled between 2002 and 2007, and the "combined wealth of HNWIs [is] forecast to grow by 8.1% CAGR between 2008 and 2013, and much of the growth emanating from BRIC regions." Oh, and what makes someone an HNWI? "At least $1 m in financial assets, excluding consumer durables and primary residence." So if you have a Aston Martin DB9 in your garage, that doesn't count toward your wealth.
This leads to the apocryphal exchange between F. Scott Fitzgerald and Ernest Hemingway: "The rich are different." "Yes, they have more money." And while 11 of the top 25 billionaires on the Forbes 2009 list were Americans, it seems as though the number of those elsewhere in the world is steadily climbing. So they're different monetarily and geographically.
But let's bring it back home. During the final week of the U.N. Climate Change Conference in Copenhagen, Zogby Interactive (zogby.com) released a survey with results that show that when it comes to the subject of climate change, plenty of Americans are, at most, lukewarm. That is, 49% of those surveyed indicate that they are "only slightly or not at all concerned about climate change," which is up from a 2007 poll that had the number at 39%. What's more, the number of those who are "somewhat or highly concerned" has gone down from 48% in 2007 to 35% at the end of 2009. The number of those who think that "global climate change and global warming is a legitimate problem" trumps those who don't by just 3%: 50 to 47. Not a huge delta, particularly when the margin of error is ±1.1 percentage points.
This finding is rather interesting: just 44% think "the U.S. government should act to reduce energy use in the U.S. even if that means significant personal lifestyle changes." Those who "strongly disagree" with U.S. government action to cut energy use is 41%, versus just 19% who strongly agree that the government should take action. And while we're not quite in HNWI territory, 35% of those who have an annual household income of $75,000 to $100,000 do not agree with the idea that the government should reduce energy use in a way that would impact their lifestyles. Sixty-two percent of those with a household income of less than $25,000 (the poverty level for a family of four is approximately $22,000) think that the government should try to reduce energy use, lifestyle changes notwithstanding. While I'm not exactly sure what "major lifestyle changes" entail, I'm guessing that those who have less in the way of a "lifestyle" are not all that concerned with maintaining it.
So where am I going with all this? Here: in a world where there is increasing demand for vehicles that are large and powerful and where there is, at the same time, a greater focus on more energy-efficient vehicles (like it or not, Copenhagen or not, more legislative action is going to be taken to reduce vehicle and other emissions in the U.S. and throughout the world, lifestyle impacts be damned), car companies are going to be facing quite a dichotomy. The worldwide recession has reduced incomes across the board, so even though car sales will rebound, the question is—taking the HNWIs out of the picture—whether people are going to be looking for vehicles that are slightly more economical. Improved miles per gallon and reduced emissions come at a cost. Someone has to pay that cost. And certainly many car companies are in no position to pick up the tab. Governments better be careful what they do—or what they don't.