MotorBeat Blog

MotorBeat

MotorBeat covers the latest developments in car manufacturing, and technological advancements in transportation as a whole. The blog will help automotive enthusiasts and drivers to get a glimpse of the motoring future.

Jordan Perch loves automotive innovation and that is his ultimate passion. He is managing the resourceful DMV.com and is an active contributor to numerous consumer and automotive blogs.

Previous in Blog: Is Apple Working on a Self-Driving Car that Will Rival Google's?   Next in Blog: Silicon Valley to Dominate the Auto Industry in the Future
Close
Close
Close
8 comments

Cheap Gas Boosts SUV Sales

Posted April 16, 2015 9:50 AM by Jordan Perch
Pathfinder Tags: cheap gas gas gas prices SUV SUV sales

One of the effects that were expected when gas prices started dropping six months ago, was increased demand for SUVs and other gas-guzzling vehicles, and that is exactly what happened in the second half of 2014. With gas prices declining to their lowest levels in five years, it should come as no surprise that America's love affair with trucks and SUVs has been rekindled. As expected, plunging gas prices dampened interest in plug-in cars and fuel-efficient gasoline-powered vehicles, bringing SUVs and trucks back into fashion.

According to TrueCar.com, an automotive pricing and information service, sales of SUVs started to climb the minute gas prices fell below the magic $3 mark, which happened in November last year. New-car sales in 2014 surpassed the 16.5 million mark, with trucks accounting for about 50% of that figure. Over the past twelve months, about 8.6 million trucks were sold in the U.S., which is an 10% increase over 2013.

Sales of pick-up trucks were up more than 5%, and SUV sales grew almost 12%, while sales of small cars only grew 4% in the first 11 months of the year. At the same time, demand for hybrids and pure electric cars has fallen, with the Toyota Prius - the world's most popular hybrid car - seeing a 15.8% drop.

The increased interest in bigger cars was reflected in the average fuel economy of new vehicles sold in the last couple of months of 2014. According to the University of Michigan's Transportation Research Institute, the average mileage in December was 25.1 mpg, a 0.7 mpg decrease from August, when it reached a record high.

In addition to low gas prices, the surge in sales of big vehicles can also be attributed to the recovering economy. Consumers' purchasing power was significantly improved last year, which made SUVs and trucks a little more affordable. Now, when the U.S. economy is starting to get back on its feet, more than six years after the global financial crisis started, consumer confidence is increasing, and new-car buyers are not that hesitant to spend a couple of thousand dollars more on a bigger vehicle.

However, while low gas prices, accompanied by an economic upturn have given SUV and truck sales a major boost, it might be short-lived. Gas is not likely to remain this cheap for a very long time, and it's expected to go back to at least $3.50 pretty soon, which will surely affect how people feel about the prospect of owning a large, gas-guzzling vehicle. That is why even President Obama warned consumers against rushing to dealerships and buying SUVs and pickup trucks. He said last week that car buyers should not forget about fuel efficiency when shopping for a new vehicle, and reminded them that saving money at the pump should remain their top priority.

On the other hand, though, some auto industry observers feel that SUV sales might continue to rise in the foreseeable future, if the economy keeps growing at this pace, reducing the unemployment rate further, and boosting consumer confidence, so it remains to be seen whether the improving economy will help keep gas-guzzling vehicles popular further down the road.

Reply

Interested in this topic? By joining CR4 you can "subscribe" to
this discussion and receive notification when new comments are added.
Guru
Engineering Fields - Electrical Engineering - New Member Fans of Old Computers - Commodore 64 - New Member Popular Science - Evolution - New Member United States - Member - New Member

Join Date: Oct 2013
Location: Illinois, 7 county region (The 'blue dot' that drags the rest of the 'red state' around during presidential elections.)
Posts: 3688
Good Answers: 89
#1

Re: Cheap Gas Boosts SUV Sales

04/17/2015 9:20 AM

Three bucks a gallon is cheap gas?

Long, long ago, back in 2006, $2/gal was considered a normal 'winter price,' with the cost going up to the 'annoying' $3/gal for the summer driving season.

And looking further back, to 2005, $2/gal would have been called 'expensive' for gas.

This is a nation of idiots with three-second goldfish memories.

__________________
( The opinions espressed in this post may not reflect the true opinions of the poster, and may not reflect commonly accepted versions of reality. ) (If you are wondering: yes, I DO hope to live to be as old as my jokes.)
Reply
Guru
Hobbies - DIY Welding - Wannabeabettawelda

Join Date: May 2007
Location: Annapolis, Maryland
Posts: 7287
Good Answers: 422
#2
In reply to #1

Re: Cheap Gas Boosts SUV Sales

04/17/2015 8:30 PM

Yeah, my thoughts exactly. Cheap, relative to what? I still drive to conserve and I wouldn't buy an SUV unless I needed the capability. I bought a 2002 'Burb back when we had four up and coming teenagers and a camper trailer to pull. Use the car and motorcycle whenever possible and not drive the pig.

Reply
Guru
Hobbies - CNC - New Member Hobbies - DIY Welding - New Member Engineering Fields - Electromechanical Engineering - New Member

Join Date: Aug 2007
Posts: 22777
Good Answers: 411
#6
In reply to #2

Re: Cheap Gas Boosts SUV Sales

04/20/2015 10:06 AM

I always felt it was a ploy on the consumers short term memory (about 15 minutes).

I have notice gas prices would continue to rise through a period of months?... $0.50-$0.75/gallon, And then take a sudden $0.07-$0.10/gallon drop. and the buzz was how cheap gas was and feel good about it...... if the consumer had more than a short term memory they had realized that the gas is actually up $0.65 more a gallon just a few months or even weeks past.

Like I said, just a ploy.

But it wasn't that long ago it was under $2.00/gallon...... I think but can't remember.

__________________
“ When people get what they want, they are often surprised when they get what they deserve " - James Wood
Reply
Guru
Engineering Fields - Electrical Engineering - New Member Fans of Old Computers - Commodore 64 - New Member Popular Science - Evolution - New Member United States - Member - New Member

Join Date: Oct 2013
Location: Illinois, 7 county region (The 'blue dot' that drags the rest of the 'red state' around during presidential elections.)
Posts: 3688
Good Answers: 89
#7
In reply to #6

Re: Cheap Gas Boosts SUV Sales

04/20/2015 10:47 AM

Yeah, too bad there isn't someplace you can look at gas prices in a proper historical reference, even if it only started recording a decade ago....

Oh wait, there is such a place!

http://www.chicagogasprices.com/Retail_Price_Chart.aspx

__________________
( The opinions espressed in this post may not reflect the true opinions of the poster, and may not reflect commonly accepted versions of reality. ) (If you are wondering: yes, I DO hope to live to be as old as my jokes.)
Reply
Guru

Join Date: Oct 2014
Location: Hemet, Land of milk and honey.
Posts: 2366
Good Answers: 36
#3

Re: Cheap Gas Boosts SUV Sales

04/17/2015 9:49 PM

There are so many parts of this story that are misleading or set with poor examples.

While it is true that gas prices started dropping six months ago, the drop was short lived, after gas prices dropped for approximately one month, gas prices rose back to where they were in the previous month. As for the decline, since it was a short term decline, that negates any cost savings for the average consumer. Americans don't buy SUV's and trucks because of some mentality of a love affair or a fashion, Americans buy large cars because they have a need for them. The 25.1 mpg figure quoted here has little to do with bigger cars as mentioned in the text, the 25.1 mpg figure is the fleet average, in other words, that is the average number calculated by all of the cars in a manufacturers fleet, not just the bigger cars but the smaller ones as well.

Here's another area: First the writer says " which made SUV's and trucks a little more affordable " , then says " are not hesitant to spend a couple thousand dollars more on a bigger vehicle" , Let's check the accuracy of those statements, currently a 2015 Nissan Versa can be purchased for about $ 10 k u.s. whereas a Ford F150 pickup will set back a buyer about 27 k u.s. , not exactly anywhere near a couple thousand or a little more affordable, is it ?

As for quoting a current american president who incidentally hasn't drove a car or paid for a drop of gasoline in almost 10 years is almost hilariously stupid.

Next there is the statement " if the economy keeps growing at this pace ( there is no mention in the story of what that pace is (%) ) reducing the unemployment rate further ( labor statistics show that the biggest gains in employment have been in the lowest wage service industries, not in higher wage professional technical and white collar industries)

I think Steve Martin said it best when he said " Americans have such a short memory, Does anybody remember when the earth blew up ? ".

Reply
Guru
Technical Fields - Project Managers & Project Engineers - New Member

Join Date: Oct 2013
Location: Texas.Baytown
Posts: 697
Good Answers: 26
#4

Re: Cheap Gas Boosts SUV Sales

04/18/2015 8:35 AM

Those that do not know history keep making the same mistakes.

__________________
If you want to know how well a broom works you do not ask the guy selling the broom or the guy who designed the broom, you ask the guy using the broom.
Reply
Guru

Join Date: Jun 2009
Location: South of Minot North Dakota
Posts: 8378
Good Answers: 774
#5

Re: Cheap Gas Boosts SUV Sales

04/19/2015 2:05 PM

What I know is most of the people I know who who drive larger vehicles all have the same concepts in mind.

Bigger vehicles and their occupants survive crashes far better than the little vehicles they crashed into. Also for us larger framed people like those of us who come from the generic lines where 6'+ 240+ #'s is just an average build bigger vehicles are so much more comfortable and easier to get in and out of.

Where I live the vast majority of people drive larger pickups and SUV's and everyone has seen accidents where smaller econo vehicles went up against a larger SUV or pickup and no matter how good of crash rating the smaller vehicle had it was pretty clear in a real world collision the larger vehicle and its occupants still came out better.

I don't know about you but I do know that for those who walked away from a crash with a few black and blue marks VS the people who had the small vehicle that spent months in the hospital and in rehab or were simply dead that extra fuel spent to drive the larger vehicle was well worth it.

Reply
Guru

Join Date: Aug 2012
Location: Land of Fruits and Nuts
Posts: 4357
Good Answers: 53
#8

Re: Cheap Gas Boosts SUV Sales

04/21/2015 11:29 PM

I am in the auto industry and the story is correct.

A year ago, people were extremely concerned about gas mileage. What were the hot sellers (in the order of hottest categories)? For commuter cars, it was the Prius, Corolla and Civic. For SUV's, it was the CR-V, RAV-4 and Highlander. For midsize family cars, it was the Accord, Camry and Altima. For entry level luxury, it was the 320i, 328i, C250, CLA 250, IS 250, ES 350, ES 300h, CTS and A4. For large vehicles, it was the Silverado, Sienna, Odyssey, F150, Tacoma and Tundra. And for luxury vehicles, it was the 528i and E350.

What's selling now (in order of hottest categories)? For SUV's (the new hot car), it's the Highlander, Explorer, Pilot, RX 350, Grand Cherokee, Toureg, Escalade/Yukon/Tahoe, Range Rover, Q5, MDX, XC60, QX60 and X5. For entry level luxury cars, it's the 328i, C300, ES 350, Q40, Q50 and M3. For midsize family cars, it's the Accord, Altima and Camry. For large vehicles, it's the Sienna, Odyssey, Silverado, Tacoma and Tundra. For commuter cars, it's the Prius plug in, Corolla, Civic and Versa. And for luxury vehicles, it's the S550, 535, A8 and Panamera.

My clients are now buying bigger, more expensive and less fuel efficient cars. In fact, most are leasing vs buying, which typically happens as you move up the food chain. There are a few buyers looking for a Corolla or Civic, but the ones who were forced to buy a small commuter have now moved up and the market for those cars is back to what it was in the early to mid 00's

What I do I conclude? That we Americans love to drive larger, more comfortable cars. I guess I'm guilty too, because we just bought an Odyssey about 4 months ago and this month a Pilot - both cars get stinky gas mileage.

__________________
Enjoy and be happy! Life is too short!
Reply
Reply to Blog Entry 8 comments
Interested in this topic? By joining CR4 you can "subscribe" to
this discussion and receive notification when new comments are added.
Copy to Clipboard

Users who posted comments:

adreasler (2); Autobroker (1); Brave Sir Robin (1); phoenix911 (1); tcmtech (1); texasron (1); tonyhemet (1)

Previous in Blog: Is Apple Working on a Self-Driving Car that Will Rival Google's?   Next in Blog: Silicon Valley to Dominate the Auto Industry in the Future

Advertisement