The latest news from Turkey is that the country might go to war with Kurdish separatist guerrillas in Northern Iraq. That makes you nervous? Well, it certainly made the market nervous and so we just saw the market's blood pressure jump up to $88.20 for the price of crude oil today, a new all-time high (not adjusted for inflation). What does this mean for gas prices at the pump? Dust off your bike!

[Source: CNBC, MarketWatch]

In the year 2000, as the IT world scrambled to fix computer problems and people bid farewell to the '90s, Ford and GM Holden - with their Falcon and Commodore, respectively - stood supreme as the dominant forces of the dominant large car market in Australia. Just seven years on and that market has shrunk from 35.9 percent to just 13.5 percent in the light of rising fuel prices which has seen a massive movement away from large family cars to medium-sized cars. The Falcon and Commodore are now fighting each other over a diminishing market while simultaneously trying to hold off the other locally produced six cylinder competition in the form of the Mitsubishi 380 and the Toyota Aurion.

Such has been the slide in demand for big cars that Holden just announced that 600 jobs will be axed at their Adelaide plant.

The market movement towards smaller cars has led both Ford and Holden to announce new entrants into the already cut-throat medium sized car market which is currently dominated by Asian vehicles like the class-leading Toyota Camry along with the Mazda6, Honda Accord Euro and Hyundai Sonata. Holden is about to release the Daewoo made Epica and Ford is bringing the Mondeo back later this year.

Analysis: The Mondeo and the Epica both look to be good quality cars at a good price but they're in for a real fight to gain traction in the medium-sized car market because it is already dominated by good quality cars at a good price. Fuel prices have clearly had a massive impact on the car market in Australia as fuel economy becomes a critical factor in the buying decisions of many consumers.

Related:

• 2007 BMW X5 to launch in Australia with 3.0-litre diesel option
• Higher gas prices not hurting big RV sales, but some owners are driving less
• New Canadian budget includes fuel economy carrots and sticks

[Source: CARSguide.com.au]

Australia's largest biodiesel producer, Australian Biodiesel Group, has announced that it is looking to raise AUD$15.9 million (US$12.4 million) to launch a new business plan after a difficult year in 2006. The money will be via a rights issue at 5c per share which values the company significantly below its current share price.

Changes to the Australian biodiesel market, including biofuels legislation, negatively impacted the company during 2006, which is now positioning itself to expand into North America where it is believed profits will be easy to come by. The biodiesel market has rapidly grown over the last three years in the U.S. on the back of rising oil prices, federal incentives and state based support of biofuels.

Analysis: A crippling drought and federal biodiesel incentives that are being phased out virtually before the industry has established itself in Australia have made it tough on the local producers. Expansion into the booming U.S. market is a good option, but what ABG are really praying for is for the drought to end and oil prices to go back up to last year's record highs.

Related:

• Consultant declares biodiesel has worse economics than ethanol
• On paying fines/taxes for your "free" waste veggie oil
• Chevron moving into biodiesel production

[Source: Egoli]

The world's second-largest truck company, Volvo AB, has agreed to buy Nissan Diesel Motor Co. for $1.1 billion in a bid to gain a greater foothold in the booming Asian market. Asia has been a weak spot for Volvo thus far, comprising just seven percent of its sales in 2006. By buying Japan's fourth largest truck producer, Volvo should be able to establish a far more secure position through Nissan's regional brand name and production capabilities.

Shares were up slightly in Volvo and hugely in Nissan Diesel indicating the market's largely positive acceptance of the news. The purchase will also give Volvo access to technology Nissan Diesel has developed to reduce engine emissions, a fact that is likely to gain importance as more countries implement stringent clean air legislation. Other synergies are likely to follow with Nissan Diesel having said that it should be able to bring down purchasing costs by as much as 20 percent per annum by joint purchasing parts with Volvo. On the drawing board for the combined companies is a jointly developed diesel-electric hybrid powertrain and research into alternative fuels including ethanol.

Analysis: This type of consolidation is increasingly likely over the coming years as the cost of R&D on next-generation powertrain technologies increases. Good to see plans to bring more diesel-electric hybrid trucks to market.

Related:

• Volvo Trucks to display parallel hybrid diesel-electric system at U.K. show
• LA and Long Beach ports look to convert truck fleets to LNG
• Clean Heavy Duty Vehicle Conference: Tackling issues of biodiesel, NOx

[Source: Bloomberg]