The sale of large gas guzzling SUV's and pickup trucks has increased by 10% this year with the direct correlation coming from that of low oil prices. As stated by CNN money, "Buyers seem quick to respond to changes in gas prices, both up and down" which has translated to an increase in these styles of vehicles and away from the more environmentally friendly options such as the Prius. The logic behind this shift deals with how as the economy strengthens with low interest rates and reduced gas prices, consumers are wanting to "buy as much car as they can." The lower fuel prices are making more room in consumers budgets to be able to afford more expensive vehicles, despite the reality of how gas prices could spike at any time, ultimately posing the idea that they may not be able to afford to drive these vehicles in some time to come.
One thing that is beneficial to this shift in vehicle purchasing behaviours is how majority of these SUV's and pickups are made by American car producers. Companies such as General Motors and Ford, with their extensive product lines, clearly dominate this car sector which has increased domestic car production and purchases.
http://money.cnn.com/2015/12/04/autos/gas-prices-suv-pickup-sales/index.html?iid=hp-stack-dom
8 comments:
Consumers are very sensitive to change in gas prices. Low gas prices and recent OPEC breakdown will keep consumers shifting to more of these bigger vehicles for a better mileage and convenience. However, sales of hybrid cars will go down as a result that will again be of great environmental concern.
It's great that more consumers are buying American cars, since we do sell pretty large cars it can be hard with gas prices. And the lower gas prices certainly help. But what happens when the gas prices begin to rise again as they inevitably will. less large cars will be sold and people will want to sell the ones they have. I think American dealerships should find a way to make larger cars more economically pleasing, which in turn would aid the environment as well.
Its good to read that this preference for larger model vehicles and SUV's will help stimulate domestic car consumption. With the recent news from OPEC regarding the cartel's breakup I wouldn't be surprised if demand for larger "gas guzzlers" increases more. It will be interesting to see if Car manufacturers start producing more and more SUV's and large vehicles.
It is positive to see that American cars are being bought more because we have been in such competition with foreign car companies. Consumers will always respond to gas prices;they act as a tax cut. It will be interesting to see what happens to the sale of other cars as the gas prices continue to change.
Just based on lower gas prices alone, I think it's silly for Americans to start buying larger cars. Like many people above me have said, what will happen when gas prices go up? It is a positive sign that they are American-made cars that are being purchased. However, it does seem like there has been a shift away from bigger cars to more economically and environmentally friendly smaller cars.
One thing I noticed about gasoline this week was they are offering a 85% cleaner fuel or at least the Meijer on 36 is. This type of gas was also ten cents cheaper then the regular unleaded gasoline. I'm curious what types of cars this gasoline is specifically used for. If it can be used for SUVs and pick up trucks, I could potentially see and even bigger increase in their sales.
To me it seems the purchases could also be driven by the fact that they believe the lower oil prices are here to stay. They understand they will have a car for an extended period of time so knowing they will be able to afford gas will be an important factor in consumers opinions. This also shows the preference consumers have for larger cars. It seems that only because of high gas prices consumers want smaller cars but given the option they would prefer to have larger vehicles.
I agree with Akram, consumers are highly sensitive to the changes of gas prices. This led to the increase of demand of larger cars such as SUVs. This brings up the environmental problems that comes with it. Last year, globally, $359 Billion was expended on Anthropogenic Climate Change abatement in the form of research, technology and renewable energy projects, almost a Billion a day. This amount has been found to be deficient by Anthropogenic Climate Change supporters who feel that $700 Billion is appropriate. We should strive to obtain more and more renewable energy for the betterment of the society.
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