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Quarterly Forecast Update: Death of the V8?

SpecialChem / Aug 19, 2008

The prospect of paying $4/gallon for fuel in the US is finally beginning to impact consumers who, until recently, only mildly altered their consumption habits. Through the first six months of 2008, pickup and SUV sales have declined 27% as consumers raced to find safe harbor from rising pump prices in smaller vehicles equipped with more fuel efficient engines. In part, the US sales downturn has been exaggerated by dwindling inventories of four-cylinder engine equipped vehicles because of powertrain supply constraints. Although near-term, financial interests have catalysed a shift away from V8s, the drive toward fuel efficiency will be sustained by regulatory and political momentum in addition to drivetrain innovation. Reducing CO2 emissions has become a top priority for automakers and global governments as they work to address the issue of climate change and the finite nature of oil as a natural resource. Significant investment in new technology is further substantiated by recently passed legislation in the US, requiring a Corporate Average Fuel Economy of 35mpg by 2020.

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