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An Early Look at Car Showrooms in 2012

Stocks in this article: GMFTM

California and 16 other states seem close to being allowed to hold automakers to tougher emissions standards than the federal government has in mind.

If these states move ahead with their plans, they'll generate enough of a critical mass to largely determine what the rest of the country is driving. So it made me wonder what dealer showrooms will look like beyond 2011, when the first of the latest round of emissions standards go into effect.

For some answers, I talked with Paul Ballew, who spent several years as a sales and markets analyst for General Motors (GM) and is now senior vice president of customer insights and analytics for Nationwide Mutual Insurance.

It can be tricky to tell what the future holds, even for someone who does it for a living. At the very least, Ballew was able to tell me pretty confidently what he doesn't expect to see in showrooms -- lots of heavy, gas-guzzling trucks and SUVs. "The probability of a comeback for this segment is low," he says. "You need a strong economy and $1.20 gas prices, so I can't see a scenario where that will be a magic bullet for Detroit."

Those who haul soccer teams or 2-by-4s around on the weekend needn't despair. Just plan on seeing more crossover vehicles that put truck or SUV tops on car bases that can handle smaller, more fuel-efficient engines. The Toyota (TM) Highlander and the Buick Enclave are examples.

A wider variety of alt-fuel vehicles are also likely to make their way into showrooms. "The great hope is that the cost for these vehicles will decline as you hit scale," Ballew says. In addition, "competition should bring out different products at different price points." As an example, he points to the Honda (HMC) Insight, a small hybrid that will hit showrooms this year with a starting price below $20,000.

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