The future of the automobile lies in eco-friendly and fuel-efficient small cars. Nowadays, this prediction is considered to be an inevitable consequence of the costly shortage of fuel and the rising detrimental effects of motor traffic on the environment. But the debates are hardly new. In the context of the oil price crisis of the 1970s German and American carmakers were already massively criticised for their lack of innovative products in the small car segment. This essay deals with the different reasons for and effects of the Small Car Blues in the United States and Germany. Comparing the product strategies of carmakers in both countries it shows that the American Big Three were reluctant to adjust their product programmes for different reasons: First, the carmakers were bound in oligopolistic competition. Because of the high investments needed for entering the less profitable small car market, they considered a diversification too risky. Second, the producers were lacking the necessary know-how for producing small cars after having focused strongly on fullsizes and intermediates for years. Third, the American car buyers were much more accustomed to big, comfortable cars than Europeans. Even the technology forcing governmental obligations to enhance the fuel-efficiency and to reduce the exhaust emissions did not change their common reservations to-wards small cars. Given the obstacles from the demand as well as the supply side, it seemed to be the right strategy for the American manufacturers to continue to produce big cars. In Germany, however, the car makers revived the production of small and sub-medium-sized cars, building on a tradition of successful people cars that had briefly been suspended. Since the mid 1970s all major producers completed a downgrade of their model range and offered cars for each segment of buyers. Moving from a sellers’ to a buyers’ market, the manufacturers were not only much more adept in mass-producing small cars profitably. These car types were also socially more acceptable because only a few years ago they had made German mass motorization possible. In addition, governmental tax incentives encouraged the German customers to buy fuel-efficient small cars. The continuous demand in this segment of the market forced the carmakers to integrate small car offers back into their product programmes. Therefore, the Small Car Blues was just a short-term delay in the consumer-oriented adjustment of the German carmakers′ product strategies.
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