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How quickly we forget: Cheaper gas = higher pickup and SUV sales
Pickup and SUV sales plummeted when gas hit $4 per gallon, and many thought these gas-guzzling segments would never fully recover. That may be true, but for now Americans are once again getting more comfortable with trucks and SUVs. Truck sales fell below 10% of overall vehicle sales back in May and June, but the price of gas falling from an average of $4.11 per gallon to $2.78 has helped the share of trucks rise to 14.1% of the overall market for September. Depending on how buyers react to the financial crisis, October could be even better as gas prices have continued to go down. SUVs have seen a smaller but still significant jump in overall share, going from 1.9% in May to 2.5% in September – a big improvement for a shrinking segment.
Much of the increased interest in trucks and SUVs can easily be attributed to huge incentives on the hoods of these hefty haulers, but gas prices are a big factor, as well. And while most analysts feel the truck market won't recover until construction picks back up, we're sure automakers are happy to see an increase in sales for their most profitable vehicles, even if it takes a pile of cash on the hood to get them moving.
[Source: Automotive News - sub. req'd, Photo by Bill Pugliano/Getty ]
Reader Comments (Page 1 of 4)
Shawn 9:12AM (10/28/2008)
It's not just lower gas prices. It is also the deals to be had for trucks & SUVs right now. Plus gas is never really that expensive. It was just the shock of that it went up so fast. $400-500/month is really pocket change for most working adults now and days. Heck, my office is filled with people that buy at least two $5 coffee drinks every day plus bottled water.
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TigerMil 9:19AM (10/28/2008)
And those people will be the first to be laid off.
Polly Prissy Pants 9:24AM (10/28/2008)
Those are also the people who save nothing then are totally shocked and unprepared when bad times come. The next thing you know they're getting foreclosed on and we have a credit crisis. Hey, wait a minute....
Shawn 9:26AM (10/28/2008)
TigerMil, what does one's coffee habit or even what vehicle they drive have to do with being laid off? You can be a vegetarian driving a Prius and be laid off as well.
remy 9:29AM (10/28/2008)
WHAT 400-500 $ pocket change?
You're talking about the rich demographic here..400-500$ is certainly not pocket change for the middle class.
Flashpoint 9:34AM (10/28/2008)
When I bought my Ford Expedition in 2002, gas was $1.60 for regular unleaded (which was HIGH back then).
Imagine my suprise when gas hit $3.00 after Katrina.
When I bought my Sclass550, gas was $3.00/gal premium.
Imagine my suprise when preimum hit $4.60
Gas is going down now cause the election is coming up. I bet its not gonna stay there past next week.
csgill75 11:38AM (10/28/2008)
There is a Dodge Dealership here in South FL. that was Advertising buy 1 Dodge Ram Pickup and get a 2nd Dodge ram pickup of equal or lesser value Free. these are for the '08 models. I guess they need to move inventory to get ready for the '09's
JZeke 10:23AM (10/28/2008)
Who the hell is paying that much a month in gas? If I flog my car like every commute is a rally then I might break $225 a month... with $4.50 a gallon gas... and thats premium.
If you're driving a car that costs "$400-500/month" much to fill up monthly then either you drive a Lamborghini 15000 miles a year or you're towing a boat everywhere you go!
rem83 10:59AM (10/28/2008)
Um...$400-$500 a month is most certainly not "pocket change" for most Americans. I make considerably more than the national average, live in Texas where there is no state income tax and cost of living is extremely low, and would have a hard time parting with that much per month on erroneous expenses.
John 12:24PM (10/28/2008)
$500 is pocket change to most responsible working adults that have actually lived life outside of college (unlike most AB responders).
JZeke 4:42PM (10/28/2008)
@John
The median household income in 2007 was $50,000. At 50k a year $500 is a significant portion of income, hardly pocket change. Approx 18% of households make 50-75k a year, but significantly those are 2 wage earner households.
To assume "most responsible working adults" can just throw around $500 is arrogant and completely out of touch with the nature of wealth disparity in the US.
Don't believe me? Look at this wiki: http://en.wikipedia.org/wiki/Household_income_in_the_United_States
All of my friends from school are doing well, earning anywhere from 50-120k a year by the age of 30. Even my friends who are pulling in 6 figures feel the sting of having to shell out $500 for a fine or unexpected purchase. And we're in the minority as we are all pulling in way more than most joint households as single males and females. If you combine our spouses incomes we are all over 6 figures, which frankly puts us in an extreme minority.
My parents and my friend's parents are in even higher tax brackets, and can lose $500 without noticing, but they aren't as arrogant as you are to believe this is how most people live. To not be aware of the difficulties the average person faces is delusional and dangerous.
You might want to get out of your narrow circle of friends and take a look at the world around you. Its not easy out there, and is getting worse for hundreds of thousands of Americans monthly.
John 5:16PM (10/28/2008)
"Even my friends who are pulling in 6 figures feel the sting of having to shell out $500 for a fine or unexpected purchase."
You illustrate my point exactly. Anyone who is making 100K+ and doesn't have $500 is truly pathetic and shouldn't be trusted with that kind of income. It's those kind of debt ridden people who are destroying this country.
JZeke 7:37PM (10/28/2008)
Wow John, I apologize for trying to make a cogent argument. Clearly you are just a troll.
garlinski 9:12AM (10/28/2008)
it's interesting to see, but driving past my local chevy dealer yesterday and I noticved one thing odd... they have a whole section that is normally trucks/work trucks/large SUV's/Avalanches and I could count on two hands how many there were on the lot. I believe it's incentives and not gas prices. These dealers don't seem to be replenishing their large lots with trucks. Granted, this guy is not a large dealer, but there are far more Malibu's on his lots than Suburbans and Silverados. Just my opinion.
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TigerMil 9:18AM (10/28/2008)
Concur. Stopping the assembly lines and incentivising (hate that word) sales works.
Several years ago there were 20 400hp Holden Monaro aka Pontiac GTO's sitting on a dealer lot in Frederick, MD a year after the same dealer was screwing the early adopters by $4,000. The truck scenario is quite similar.
AntBee 9:15AM (10/28/2008)
Some people will never learn. :-(
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P.V. 6:36PM (10/28/2008)
Thank you! Finally, a reader who shares my sentiments!
TigerMil 9:15AM (10/28/2008)
There's more to this than just dropping fuel prices. I would have bought a BF Escalade EXT (the Caddy Suburban) if it weren't so ridiculously overpriced, same with the GMC Denali. I looked at a 572 cubic inch marine block crate engine retrofit to a 2500-series GMC/Suburban (dealer would do it and still meet emissions...don't ask) but the basic problem is/was the excessive initial price of the truck. Now that the price has dropped (for whatever reason) and even the financing dropped to essentially free money, no wonder the sales are up.
Just not enough to save the particular line or make it profitable.
Any MBA (talk about a dying breed) would also be able to explain the difference between maximizing profit and minimizing losses. GM needs to consider the latter for the next few years.
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raz 9:16AM (10/28/2008)
Some people in this great country of ours will never learn. I bet now they are looking for a loan to get that 7 room house they do not need.
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TigerMil 9:24AM (10/28/2008)
You miss the point. It was never about needing the 7BR (I assume you meant 7 bedroom because many houses have seven rooms) house...it was always about riding the investment bubble associated with the house. The incorrect plan was to ride up and up and then get off the Ponzi scheme and retire to a small house with the wad of cash. It only works for the few who got out early. The rest get screwed and write their congressman or vote democrat so they can get their losses indemnified by free money.
A democracy can last only so long until the electorate realize they can vote themselves largesse from the public treasury...with apologies to the original.
We are there now.