Real Estate Investor Magazine South Africa August 2013 | Page 65

MOTOR TALK

BY RUSSELL BENNETT

The Downsizing Dilemma
Does it work?

I

n our next issue of REIM, we look at several
new cars which effectively embody the
modern trend of downsizing to evaluate
just when this approach works, and when it
doesn’t. Like any new approach to minimising
costs while simultaneously reducing carbon
footprint, the various considerations have to be
balanced in order to provide the customer with
a compelling reason to make the adjustment, as
change is a state which most people around the
world are only happy to deal with if forced to do
so or at least convinced by the positive aspects.
A heavy-handed and dictatorial approach
is not going to be accepted. In this scenario, a
motoring manufacturer foisting a new product
which is in all the old quantitative metrics
inferior to more traditional products but does
provide superior fuel efficiency and produce
fewer emissions, won’t sell in huge numbers
purely on the strength of the argument that
“everyone has to reduce their carbon footprint
if we’re to reverse the effects of human-induced
climate change, therefore you must pay more
for this new product even though it’s not as
appealing a vehicle using the judgement criteria
of yesterday”.
Sure, the general public understands that
climate change is an issue, or at least is going
to be an issue at some unspecified point in the
future. However this same general public is also
perfectly aware that the companies at the top of
the economic food chain pay little more than
lip-service to the problem while boosting their
profits selling this so-called solution.
www.reimag.co.za

That’s not to say these same manufacturing
giants aren’t investing capital and going to some
lengths to drive down their own carbon impact.
In recent years the major players have taken great
strides in reducing their output of pollution as
well as increasing their utilisation of renewableenergy alternatives compared to the dirty,
traditional sources.

And how is this value passed down to the
consumer? In higher prices for less desirable
products. Today, purchasing a car which is
greener and more environmentally efficient
than previous generations comes at a substantial
price premium, the most ludicrous example of
which is the Ford Fiesta 1.0 Ecoboost which
forms a part of this article series.

However even these steps have not been taken
in the interests of global philanthropy. No,
despite the initial capital costs, these actions are
justified by increasing profits through reduction
of costs. Manufacturing plants drawing the bulk
of their energy needs from their own supply
generated by vast solar banks might cost a lot to
initially build, but over the years they represent a
significant reduction in input cost which quickly
amortises the initial expense and ultimately
turns into an invaluable ongoing asset.

Not only is it the most expensive Fiesta on
sale today (bar the nicely spicy ST model now
added to the range), it’s comfortably the most
expensive Fies ta ever released. And it can’t
justify this price tag by claiming to include a
raft of all-new efficiency-boosting technology
the development costs of which have to be
carried by the consumer, like for instance a
hybrid vehicle can. All Ford has really done is
reduce the engine size by dropping a cylinder
and boost the power output of the result by
adding a turbo. Not rocket science at all in
the field of automotive engineering.

What’s more, these expenses yield carbon
credits for the corporation which they are able to
profit from immediately by trading the long-term
reduction in CO2 output on the global carbon
exchange. A mechanism which itself makes a
mockery of “reducing our carbon footprint for
the good of future generations” as the PR pieces
will spin it. Driving down your own megacorporation’s output of harmful greenhouse
gasses is itself an enormous business opportunity,
as it enables other companies unwilling or unable
to comply with the emissions output restrictions
prescribed to become compliant simply by
purchasing these carbon credits. So the capital
expense generates immediate, real value.

Any consumer putting an iota of thought
into their new car purchase can recognise
the cognitive dissonance this reasoning
introduces to the purchasing decision, and
isn’t likely to appreciate the sentiment. There
are however several ways in which selling
the concept of downsizing as a positive
does actually work, but trying to force the
customer to sacrifice the motoring pleasure
they’ve become accustomed to enjoying for a
higher price based purely on fear mongering
is tantamount to simply not contributing to
finding a solution.
August 2013 SA Real Estate Investor

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