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.
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