Wednesday, September 9, 2009

Small is not beautiful

In the last two years, sales of sports utility vehicles (SUVs) have been falling worldwide. According to media reports, the share of full-size trucks and SUVs, which used to stand at more than 18 percent of total auto sales, in US, the largest automobile market in the world, has come down to 11 percent.

The main reason behind this fall is the skyrocketing price of oil, which at point reached an all time high of $146 per barrel, last year. Later, the global economic slowdown, which put a dent on incomes of many households, also prevented potential buyers from investing on these vehicles.

Needless to say, SUVs are known as gas guzzlers. And at times when incomes fall or fossil fuel prices rise, every sensible person tends to cut down on everything that are unnecessary and luxury.

Lately, many responsible citizens worldwide are also reducing SUV consumption for another reason: the pressing green issue. These vehicles generally consume 1.5 times more fuel than normal cars, meaning they also emit more carbon dioxide, which is partly responsible for gradual destruction of our environment and ecology.

Recently, the US government itself tried to control Americans’ appetite for big SUVs by introducing a car scrappage scheme. Under this, the US government started giving car owners vouchers of $4,500 for trading in a car giving 18 miles per gallon (mpg) or less in exchange for a model that gives at least 28 mpg.

This shows the US government is encouraging Americans to embrace the concept of “small is better” -- in a way setting a precedent for other countries.

But the trend seems just the opposite in Nepal. Many nouveau riches of the country, who were earlier driving small cars like Hyundai’s Santro or Maruti’s Alto, now want to sit behind the steering wheels of Hyundai’s Tucson or KIA’s Sportage. Then there are the ultra riches who have never gotten out of the hangover of Toyota’s Prado, Mitsubishi’s Pajero and lately Land Rover’s Freelander and Range Rover series.

The irony is at a time when sales of SUVs are declining worldwide, Nepal’s SUV market grew by around 10 percent in the last fiscal year. According to auto dealers, around 1,000 units of SUVs are sold in Nepal every year.

"This is mainly because of the boom in the real estate business," Sachin Aryal, deputy general manager of Continental Trading, the authorized distributors of KIA Motors in Nepal, told myrepublica.

"If you sell a piece of land in Kathmandu or other urban areas nowadays, you become a millionaire instantly. This gives one enough money to buy a relatively expensive type of vehicle like SUVs."

Another reason, according to Aryal, is the condition of roads, which are filled with pot holes. But this seems to be just an excuse, as one definitely needs to invest some extra amount to be able to drive off comfortably on those adverse street conditions. But where is the money coming from? "It’s the real estate business once again," Aryal said.
And with the introduction of cheap but powerful SUVs like Hyundai’s Tucson, this appetite is only expected to grow.

Looks like the American dream of owning an SUV -- which has received many criticisms like “wasteful excesses” -- is soon becoming a dream of Nepali car owners.

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