See the complete list of trends that we analyze.

1. Automobile Industry Introduction

In the U.S., numbers available through August showed the 2008 car and light truck market to be on track to drop dramatically, to 14.1 million units for the year, down by about 2 million from the number of units sold in 2007. Globally, about 55 million new cars were sold in 2008, up from about 53 million the previous year, according to Scotiabank Group.

There are approximately 250 million vehicles in operation in the United States. Around the world, there were about 806 million cars and light trucks on the road in 2007. By 2020, that number will reach 1 billion. Currently, those vehicles burn over 260 billion gallons of fuel yearly.

In the U.S., as of 2007, the industry included about 20,700 new-car dealerships and 996,800 million manufacturing employees (down from l.07 million the previous year). Total revenues at new-car and light truck dealers were $693 billion, according to NADA, and employment at new and used car dealers of all types totaled more than 1 million.

The years of 2004 through 2006 will long be remembered as a pivotal period in the automobile industry. It was a period during which high gasoline prices finally created significant demand among U.S. consumers for fuel-efficient vehicles. Gasoline prices of approximately $2.00 per gallon started taking a huge bite out of family budgets in 2004, and many middle-class consumers who owned fuel guzzling SUVs and pickup trucks began to wish they had vehicles that were much less expensive to operate. By 2005-2006, with gasoline prices in the $3.00 range, the party was over for large SUVs and family trucks.

Retail gasoline prices of more than $4.00 per gallon for much of 2008 literally put the brakes on new car sales-it was a dismal year for the car industry as a whole. Through the eight months ending with August 2008, car industry sales were down 11.2% in the U.S., with sales of pickup trucks, minivans and SUVs down 19.3%.

One result has been phenomenal demand for Toyota's Prius hybrid car. Toyota responded by raising the price and planning production increases. Meanwhile, Toyota made investments in its Georgetown, Kentucky plant to enable it to manufacture hybrid Camrys. Meanwhile, there has been good demand for Toyota's Lexus RX400h hybrid crossover. Ford launched its first hybrids, and other carmakers, including GM, were greatly encouraged in their own efforts to bring more hybrids to the market. However, consumers generally aren't as impressed with U.S. hybrid technology as they are with that of Toyota models, and actual mileage results on the road are often disappointing, largely due to driver habits such as quick acceleration which uses more fuel. Over the mid-term, many hybrids will be available from a wide variety of makers, and technology will steadily improve.

In the American market for the first eight months of 2008, Toyota sold 119,688 Prius hybrids, 36,633 Camry hybrids, 15,651 Highlander hybrids and 11,754 Lexus 400h hybrids. Honda sold 25,577 Civic hybrids during the same period.

However, the most important trend over the mid term will be rapid growth in plug-in hybrids (PHEVs) and electric vehicles such as GM's Volt (scheduled for a 2010 debut), a car that will include a gasoline-powered generator capable of charging up the batteries for those occasions when it is not convenient to plug in. Tremendous improvements in battery technology will soon come to market, further enhancing this trend.

Other fuel-efficient vehicles, such as BMW's MINI Cooper, and the Smart, recently introduced to the U.S., have enjoyed soaring demand.

Consumers and emissions regulators are taking a renewed interest in advanced automobile technologies. Clean diesel engines, like those offered in new cars from Volkswagen and Mercedes-Benz, offer exceptional performance and fuel economy while providing the quiet, vibration-free running associated with gasoline engines. Clean diesel offers a particularly attractive alternative over hybrid technology in the U.S. market, and is already widely used in passenger vehicles in Europe. The use of ethanol as a gasoline additive in America has grown rapidly, regardless of whether it makes any environmental or economic sense, thanks to requirements enacted by Congress.

Meanwhile, sales of heavy SUVs lagged miserably, and automakers such as Chevy, Hummer and Cadillac offered large dealer incentives and rebates in an effort to move these vehicles. Ford cancelled production of its larger-than-life Excursion SUV in which some owners reported getting as little as 11 mpg in the city, and GM cancelled production of the massive Hummer H1.

Car consumers outside the U.S. made history as well. The rising affluence of consumers in China created both huge opportunities and huge problems. China has become one of the world's largest importers of petroleum products, largely to fuel its burgeoning fleet of cars and trucks. Streets and highways are clogged with new cars, to the extent that traffic and smog are a nightmare. Some Chinese cities are trying to cut down on new traffic by requiring car owners to purchase expensive permits. Meanwhile, automakers from all nations are racing to establish plants and partnerships in China to produce cars both for domestic use and for export. In fact, low labor costs and increasing product quality in China threaten auto plants located in high cost nations such as the U.S.

Vehicle sales in the booming nation of India are soaring as well. While motor scooters continue to sell at a rapid clip, a growing middle class is also creating great demand for cars. Local industrial giant Tata hopes to launch a no-frills Indian car at a base price of about $2,500 U.S. Other rapidly growing automobile markets include Russia and Mexico, along with many markets in South America.

Not to be overlooked are the vast changes taking place in automobile manufacturing. Flexible factories have reduced man-hours and costs per car, while offering a much wider range of choices for customization to consumers. Today, more than ever, car manufacturers and their suppliers are cooperating in the design and manufacture of new cars in ways that are revolutionizing the entire process.

Inexpensive cars manufactured in China will soon be on the market in the U.S. The question is not whether China will export cars and trucks, but whether consumers will be convinced that they offer safety and reliability. Meanwhile, U.S. automakers are making intense demands on their component suppliers for lower prices-these suppliers are, in turn, looking to low-cost production in China. Meanwhile, the Big Three (American automakers GM, Ford and Chrysler) face difficult times at best. The Detroit companies are under intense competitive pressure from foreign-based firms while enduring high labor costs at home. These firms are struggling to reengineer all parts of their operations, from design to manufacturing to marketing in order to cut costs and regain market share.

Chrysler has undergone the most gut-wrenching change of all: a new owner. Cerberus Capital Management, one of the world's largest private equity investment firms, purchased Chrysler from DaimlerChrysler AG during 2007. Daimler had purchased Chrysler several years ago, only to find itself battling the many challenges facing U.S. automobile manufacturers. Daimler was more than happy to unload it. The German-based DaimlerChrysler renamed itself Daimler AG. Chrysler legally became Chrysler LLC. This is one of many major investments made by Cerberus in the ailing auto industry, including investments in parts manufacturers and in car loans provider GMAC. Cerberus hopes to be able to introduce better management, new strategies and greater operating efficiencies in these companies. However, results to date have been disappointing, largely because Cerberus bought in just in time for a massive market downturn.

By the summer of 2008, the Big Three were lobbying for possible long-term loans from the U.S. Government totaling as much as $50 billion. However, the government already had its hands full thanks to the financial market crisis that began with crashing mortgage and home values, so it remains to be seen whether any federal assistance for the auto industry is either warranted or forthcoming. Nonetheless, Ford, GM and Chrysler are encouraged by the fact that Congress, in 2007, passed a law authorizing loans of as much as $25 billion to help automakers and related suppliers bear the cost of changes in manufacturing needed to produce highly efficient vehicles. The Big Three hope to double that potential loan amount. However, the current law requires an appropriation, which has not yet passed Congress, and requires the Department of Energy to set up a system for processing and granting such loans. As of August 2008, none of this had been accomplished, and the fact remains that one or more of the Big Three could run out of cash in coming months. While the U.S-based Big Three struggle, Toyota is attacking mercilessly. It has the capacity to manufacture over 1.5 million vehicles yearly in North America.

The parts manufacturing business in the U.S. is equally dismal. Delphi Corp, the giant supplier that was part of GM until 1999, lost nearly $4.6 billion in 2004 alone and declared bankruptcy in 2005. The company had been unable to find financing to enable it to exit bankruptcy as of August 2008.

Asian car manufacturers are generally enjoying success, with Toyota and Honda at the forefront. South Korean makers Hyundai and Kia have established themselves as true, high-quality manufacturers with a growing global customer base. They will give the Japanese very tough competition over the long term.

European manufacturers are facing challenges of their own. High costs, tough labor laws, daunting government regulations and a few disappointing model designs have hampered recent results. Meanwhile, European markets were suffering from a general economic slowdown and high fuel costs as of mid 2008, leading to poor automobile sales results.

The Progressive Insurance Automotive X PRIZE is offering $10 million in cash to the first competitor able to create a viable passenger vehicle capable of operating at the equivalent of 100 miles per gallon. The competition is in conjunction with the X PRIZE Foundation. As of mid 2008, more than 70 teams had registered to compete, from 12 nations.