Lesson not learned: SUV sales outpace sedans

posted at 1:47 pm on January 6, 2009 by Ed Morrissey
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When gas prices skyrocketed on global demand for energy, Americans began looking for fuel-efficient bargains in new vehicle sales.  Analysts predicted that the price shock would resonate with buyers even after the oil bubble popped and prices declined to reasonable levels.  Apparently, the lesson didn’t last long:

It looks like the Highlander is in and the Prius is out — for now at least.

Trucks and sport utility vehicles will outsell cars for the first time since February, according to a December report by Edmunds.com, which tracks industry statistics.

“Despite all the public discussion of fuel efficiency, SUVs and trucks are the industry’s biggest sellers right now as a remarkable number of buyers seem to be compelled by three factors: great deals, low gas prices and winter weather,” said Michelle Krebs of AutoObserver.com, a division of Edmunds.com, in a prepared statement.

“It was this summer that customers were concerned about the gas mileage. It hasn’t been a topic of conversation lately,” said Dave Lawson, the general sales manager at Pomoco Chrysler Jeep Dodge in Newport News. The majority of Pomoco’s inventory is SUVs, and its best-selling models are minivans.

That may be good news in the short run for domestic automakers, which bet heavily against smaller models, but in the long run will provide another opportunity for price shocks to American consumers.  Oil has dropped to levels not seen in years, but that’s not due to massive new amounts of petroleum reserves.  The commodity trading has sharply declined due to a much lower demand caused by the global economic recession, and it’s not likely to last.  When economies begin recovering, energy demand will increase, and we will almost certainly see a return to $3 per gallon gasoline within a year, two years at the outside — unless we massively increase American production and refining during that time.

Why do consumers gravitate towards the bigger, less efficient models?  It’s not because Americans like to spend money on gasoline.  Smaller, lighter models are less safe, which is one of the reasons people resisted the CAFE standards increase that Democrats pushed through Congress last session.  Winters, especially hard winters like we are experiencing now, tend to amplify those concerns.   An SUV is a lot more likely to survive a big impact than a Prius, which makes it a better investment, even without considering the safety of those inside the car.

Even with that, though, one would have thought that consumers would have remembered the pain at the pump this summer and begun moving away from the SUV models in favor of more efficient cars.  They may prefer the bigger cars now, but they may have to drive less later as a result.

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