There seems no doubt that with the rising price of fuel there will be a serious movement to smaller, more fuel-efficient vehicles.
The first and most obvious step for automakers will be to downsize the engines and performance of large vehicles. This is one way to slow the migration from pickups and big SUVs. A lot of people prefer large vehicles even if performance is compromised.
But sooner or later it will be important to offer luxury buyers vehicles that are smaller but just as roomy and with all the creature comforts of larger, more expensive vehicles.
American manufacturers and customers long have felt that small cars equaled cheap basic transportation. Few people want to downsize into small vehicles that are cramped and lack the features and accessories to which the consumers are accustomed.
With fuel prices near or more than $4 a gallon, a lot of folks, regardless of their wealth, won't want to drive a gas hog that gets 15 mpg. It has nothing to do with their ability to pay; it simply doesn't make sense to a lot of consumers.
But manufacturers still have not developed a small luxury car with the interior volume and appointments of larger luxury vehicles.
It may take a while to make consumers understand that small might mean diamonds rather than coal. Consumers have been taught that bigger is better, costs more and is more luxurious.
It takes more than gussying up a small car and trying to convince buyers that it's luxury. That will not work. Cadillac had the Catera, and Lincoln had the Versailles. Both were disasters in the marketplace.
Whether a sea change in consumer tastes will occur depends on the price at the pump and whether consumers feel it is permanent.
But regardless of the price of fuel, there is a substantial market for smaller, far more luxurious vehicles. And whichever company gets there first will own the market for quite a while and will strengthen its entire brand.