The car companies can barely give away an S.U.V. these days. The latest evidence of this comes in the form of three more closings of factories making S.U.V.’s. According to that New York Times article, S.U.V. sales plunged by more than 40 percent this year, compared to a 16 percent decline for new vehicles overall.
Here is the puzzling thing. The apparent cause of death for S.U.V.’s was high gas prices. Doesn’t that mean that with low gas prices S.U.V. sales should come back to life?
I can think of a few reasons why that might not be the case:
1) Consumers think that the low current gas prices are temporary, and in general gas prices will be high in the future. Thus, they don’t want to get stuck with a vehicle that gets poor gas mileage. The question this raises is why consumers were so sure six months ago that gas prices were going to be high forever (which turned out to be wrong), but don’t believe now that gas prices will stay low.
2) The uncertainty of fluctuating gas prices takes the fun out of owning an S.U.V. Even if gas prices won’t be that high on average, it is so unpleasant to have an S.U.V. when gas prices are high that people don’t want to have them if gas prices are volatile. This explanation seems kind of dumb to me, but maybe it is possible.
3) When gas prices got high, it became uncool to own an S.U.V. Perhaps the process for going from cool to uncool is not easily reversible. Once something is uncool, it remains uncool for a long time, even when the forces that caused it to be uncool recede.
This might explain why the demand for pickup trucks remains strong, even as S.U.V.’s fade. Somehow the spike in gas prices didn’t make pickup trucks uncool in the same way as S.U.V.’s. Similarly, minivans have never been cool (or at least not for a long time); so if this explanation is right, minivan sales should stay strong.
- Which of these reasons do you think is most likely? Or do you have another theory? - McKay
30 comments:
i am in 5th period by the way-just FYI
I think it is completely true about the high gas prices killing the sales and possible future of the sport utility vehicle. Not everyone is willing to be in debt just to have a SUV (since that is what seems to take place for most Americans) so the easiest solution is to get rid of it. Like you said once something goes "uncool" it stays that way, and paying the big bucks to keep an exaggerative vehicle doesn't seem to be worth it. For trucks on the other hand are acknowledged as a "work" vehicle, and while the gas guzzling still goes on with trucks the benefit still outweighs the cost because of a truck's wide range of practicality. Common sense kind of stuff.
1. is most likely because alot of ppl arent too focussed on cool cars as much as they are on the gas mileage of the car. my car, for example, is a piece of junk that has a trunk that can't be opened 'cause it might not close (again) and stains galor, but i get about 26 to 28 miles per gallon in the city.
i think high gas prices would be the reason for most people to change from a SUV to a smaller more effeciant car although for some people gas prices are not an issue, but those people are few and far between.
I would have to go with the first theory. Although, right now is the best time to buy a car, I just got my Jeep for practically nothing. But, if everyone is so conscious of the gas prices, car-pooling is also an option. I personally would never drive a car, no matter what the economy is like, an S.U.V. is a lot more practical.
i think that the first explanation is probably the most accurate. gas prices have been kind of crazy and it is really not a sure thing that it will stay low. it will most likely get more expensive (if OPEC gets their way) and people are (maybe) being smart and adjusting. we don't know that it will get super high and we don't know if it will stay low for a little bit. we just have to prepare ourselves. i drive one of those cars that are not even from this century. the gas industry and i are still not friends even though it has mellowed down some.
Levitt's ideas seem most plausible by melding them together. To answer his question posed in his first hypothesis, I believe that the public was convinced that the current sources for oil were running out (aka The Inconvenient Truth syndrome) instead of factoring in social/ political issues. This idea leads into the second hypothesis: now, the public is aware of the volatile and fluctuating nature of prices and are playing the (long-term) conservative spending card. As for the "coolness" factor as trite as it may seem, there is a point. From observation of the Coronado parking lot and generalization, a truck is generally the first choice car for a boy. As for mini-vans, it is an enigma.
Personally I think that being cool or uncool plays only a small part in the popularity of the S.U.V. because sales for trucks and minivans haven't been affected so much. Everyone knows what a minivan is used for, and a truck has many more uses than just looking cool. An S.U.V. can't haul like a truck can and it can't fit as many people in it as a minivan. So I think it was just kinda the logical choice for people to not buy that one as oppose to trucks and minivans.
I think his first theory is most likely. People just got rid of their big SUV's because their gas mileage was terrible. The SUV is still cool in my opinion and is just as practical as a truck or minivan. They are actually a blend of the minivan and a truck. You can carry at least 5 people and the smaller ones have a larger trunk space and you can put the third row down in the larger ones.
I think the 1st theory is the most plausible. People like to know where their money is going to go. With the constantly fluctating gas prices, it is not wise to own an SUV.
Theory one is probably the most likely, but theory three takes a close second. After all, what's cooler than a minivan? Kidding. I think the SUV trend has now faded considering Americans are becoming more economically conscious and are realizing that gas costs will continue to rise even though they are low right now.
I agree most with theory one. I know from experience that I bought a car with good gas mileage instead of an SUV. All because gas prices were rising. And it gets expensive having to pay all your bills let alone gas money. It is only practical to get a car with better gas mileage. Seeing as the average American can't afford spending excessive amounts, on unecessary things. People are starting to become more conscience of these things.
i agree mostly with one. people these days dont really have the money to buy a suv anyways so why not buy a car that gets better gas mileage and is cheaper?
I believe that theory one is most likely the cause of people's disinterest in purchasing SUV's. The fact of the matter is that the citizens of the United States, in light of the economic recession and continual fluctuations in gas prices, are far more interested in protecting their money than purchasing a vehicle that could result in personal finalcial decline. Until things start to settle down, Americans will continue to tight fist their money and remain on their toes in anticipation for the next change in the economy.
Number one. It's not practical to have a vehicle that's going to run on alot of money when you can have one that runs on less and still gets you places. Even with gas prices low people still don't want to pay more than necessary with the uncertainty of the economy.
I think that the most legitimate reasons for the decline in sales of S.U.V.'s are his first and third theories.
The first states that PEOPLE THINK that gas prices will always be high, implying that it's all in their heads. The logic being that even though its low right now, it will go back up soon. The fact is; they do think that! People who dont have to worry about how much to pay for gas probably dont think as much about it as the rest of us, but the gereration that I'm growing up in has taught me that gas prices are high and you have to watch out for that and allow extra money for it. So, i think that high gas prices have become the great excuse for a lot of things, including buying a new car.
The third states that it is "uncool" to drive an S.U.V. this is an opinion and that can vary from house hold to house hold, but i think S.U.V.'s (unless they are something really expensive like an escalade or a denali) have become the new "mommy-mobile" and that's what goes against all the stuff we see on tv about staying youthful and just... not old.
So, in my opinion, these are two of the most legitimate reasons that people dont buy an S.U.V.
The first theory is already proven to be correct, I mean, at one point last year gas prices were almost $3 and now it's gone down to about $1.75-ish. It's only natural for the population to safeguard themselves from having to spend MORE money, especially with the unstable economic situation.
As for the pickup trucks not losing as much popularity as the S.U.V.'s, it's pretty obvious trucks are more useful esp. when transporting certain goods. It's not like you can load plywood, trees, and other ginormous things efficiently in an S.U.V.
Levitt makes a strong arguement with his 3 possible reasons for the decline in SUV sales, but i think what it really comes down to personal choice of the consumer. Is the consumer willing to spend the money on gas to drive around in his Escalade that gets 10 miles to the gallon or is he gonna save money and drive around in a car with only two seats that runs strictly on solar energy. The high gas prices didnt drive the sale of SUV's down, but in the consumers mind the benefits of driving a SUV didnt outweigh the cost of driving one. Personally i dont mind paying more in gas if i am going to get more use out of my truck but for many ppl the cost of driving a large vehicle outweighed the benefit and ultimately caused SUV sales to drop.
The SUV's are not being sold like they used to be because of the high gas prices. Even when the prices for gas fell, people still are not buying SUVs because they are being smarter with their money. People are thinking further down the line when prices will rise again, so they are preparing now by buying cars with better gas mileage instead of the gas-guzzlers.
Whats stopping them from making fuel efficent SUV?
i think people are just looking for the best option without the big sacrifice and if they need to make a sacrifice for the high gas prices then the drop in sales for the gas guzzling SUVs is the only way to get more for a persons buck on not spending more on gas.
SUV's will probably never become as popular as they once were. Although gas prices may go down sooner or later, the fear of higher prices will continue to lower the sales of SUV's.
Well bigger cars will not sell as well as smaller cars because people worry that gas prices will rise higher and higher and SUV's will not be very effecient. If people want SUV's then they can suck it up and pay for the gas.
I agree with the theory of number one. With high gas prices, the focus of our communities is is what car will get you farthest. Gas prices have shot down the need for big SUV's.
I agree with the theory of number one. With high gas prices, the focus of our communities is is what car will get you farthest. Gas prices have shot down the need for big SUV's.
I have to agree with the first theory. Our current economic crisis is a wake up call for the bigger picture, and the best car that will provide you with not only your basic needs, but also satisfy you money wise is the best option currently.
I believe it has a lot to do with the fact that it is much easier to jump to what is less expensive than to jump back to another venue when it suddenly becomes affordable. Someone who has gone to a car to save money is less like to all the sudden sell the car just because of cheaper gas prices. I also agree with the first theory in the respect no one really believe enough that the low prices will stay to put themselves out there financially especially in current times
Reason one for sure.
Even though the gas prices are low, it doesn't mean that they're going to stay that way. The gas prices will spike up again as soon as they're able to, this is obvious. But, regardless, just the fact that they might go up is enough to sway people from buying them.
In the grand spectrum of things, SUV's were a fad. Fads come and go as soon as something comes along and dethrones them (ie, hybrids.) And as far as pickups go, pickups are not a "fad" like suv's. Pickups have been a part of our society for many, many years. So yes, while they may not have the best gas millage in the world, they've been a part of our society for a long time, they've gone from necessity, to fad, to traditional. They're simply just a part of our culture now.
I agree with choice number one. Because of the fact that most americans are looking to save money and one way is by not spending it all on gas
theory one is the most logical..
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