Demand for smaller cars may lead to lower premiums

The volatile economy has forced many drivers to downsize their vehicles in order to save money on car insurance costs and fuel expenses.

With the price of petrol riding high across Australia, it makes little sense for people to drive around in huge gas-guzzling machines that are costing them a fortune to run.

Finally, it seems that car manufacturers have recognised the increasing demand for more economical vehicles that require less fuel.

According to the Press Association, many of the new models showcased by the world's leading companies at the Geneva Motor Show – which kicked off this week – are smaller and more efficient.

While environmental issues have also had an impact on their latest designs, analyst at IHS Automotive Tim Urquhart said that the ongoing cost-cutting measures being deployed by people all around the world have forced the likes of Mercedes-Benz and Volvo to adjust.

"Buyers are increasingly looking to downsize and hunt for savings in terms of running costs and depreciation, while enjoying the status and quality of premium brands," he was reported as saying.

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