• Dec 30, 2010
The average gas price in the U.S. is over $3 right now, and there's a good chance it'll go higher before too long. What do you do in this situation if you're a car dealer with a lot full of SUVs and big crossovers? You start being cautious.

That's the takeaway point from an Automotive News article, with the key quote coming from a New York Ford dealer, who told the industry publication:
SUVs are still important in this area, but people are downsizing to more fuel efficient SUVs instead. We are still stocking with the idea that it may go either way. Hoping for the best, but prepared for anything.
For the moment, gas prices aren't high enough to make people panic and try to offload their gas hogs the way we saw in 2008, but Kelley Blue Book analyst Alec Gutierrez told Automotive News that SUV sales could drop "dramatically" once gas reaches $3.50 or $4 a gallon, saying, "The days where a dealer could just go to auction and stock up on a bunch of SUVs and hold them for 40 or 60 days are over."

The last time gas jumped up to panic levels was in 2008. That's when Joe Crawford took the picture that illustrates this post. In the accompanying Flickr caption, he writes:
So a local (Culver City) car dealer started storing cars on the top of our parking garage. I always park on the roof, so anytime I am up there I see the cars. I have taken to think of these cars as an economic indicator. They all seem to be SUV vehicles. I wonder about why they are up there, and why there seems to be more every week. I suspect the fact that they're stored here has something to do with the price of gas.
We suspect he's right, and we can't imagine there are dealers out there who want to have to go through a process like that again.

[Source: Automotive News – sub. req. | Image: Joe Crawford – C.C. 2.0]


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  • 34 Comments
      • 4 Years Ago
      Rear or all wheel drive station wagons are more fuel efficient and are safer to drive than suvs because of better handling and therefore can avoid accidents. I always drive fuel efficient vehicles and have been doing so since gas was .35C a gallon. I would just rather spend my money on other things.
      • 4 Years Ago
      At least Ford and GM should be better able to weather the storm than they were in the past. I think Fiesta, Focus, and Cruze sales are gonna take off in 2011.
        • 4 Years Ago
        Hard to tell with GMC Denali and Escalade EXT (Suburbans) still being sold at near sticker...the dealers don't want to deal. $10K off an exorbitant sticker price that still gets GM $15K profit per vehicle is ludicrous.

        • 4 Years Ago
        @Sgt Beavis 8:36AM (12/30/2010)

        Cruze sales have not been great btw and GM still needs a sub compact car the quicker they can get Corsa over here the better.
        • 4 Years Ago
        macandme: What the hell are you talking about? November was the first full calendar month for the Cruze in the US market and they sold 8K of them. This considering that the Cobalt is still being flushed out of the system at deep discount. Until all the Cobalts are gone, you will never really know its true selling power. In a day or two, we'll get the December numbers, let's see then. Stop assuming that the car is not selling, because the actual numbers shows otherwise.
        • 4 Years Ago
        I find it interesting that Autoblog, in all it's anti-GMness, used a Buick Enclave in it's picture which gets Fuel economy than smaller vehicles like the Honda Pilot, 4 Runner, and Veracruz.
        • 4 Years Ago
        @Cmicasa the great

        Well they are on a roll, just as they unfittingly used a Ford Explorer pic for their "Paris Bans SUV's" post (which is not even offered in France).
      • 4 Years Ago
      Well, my dear US-friends, way out here in the middle of the Atlantic (i.e. Iceland), as of 1 Jan 2011, we'll be paying $1.90 for a litre of petrol. For you non-metric fans, that is $7.20 per gallon. So, believe you me, you've got a long way to go before you hit really, really high gas prices.
        • 4 Years Ago
        Yeah, but you get to warm your houses with toasty volcanic lava (or geothermal hot water, I forget which), instead of heating oil like we use in many parts of the US. Parts of the US which on many days of the winter are colder than Reykjavik. So I might have to do the math to see if I'd take the deal for $7 gas with free heat and hot water in my house, or $3 gas with a $700 - $1500 heating oil bill per year.

        Also, you have a hydrogen fuel station, so just go there. Even though there's only one of them, and you probably can't buy a hydrogen fuel car in Iceland anyway, at least not for a reasonable price.
        • 4 Years Ago
        No problem rllama, always happy to enlighten ;) Actually, you aren't that far off with the direct lava heat idea. The latest geothermal plants use hot steam coming from drill holes both to power turbines and warm up cold water which in turn is used to warm up houses. It's possible to do this only in the volcanically active areas of the country, since the ground temperature is (understandably) much higher than elsewhere. So it's basically harnessing the power of lava, as you suggested!
        If only we could use that energy for our cars, but I guess that will be possible once electric cars take over.
        • 4 Years Ago
        yeah, but how far do you have to drive?
      • 4 Years Ago
      4 cyl. Equinox is still selling like hot cakes. They are hard to find on dealer lots in NY because they are selling so fast. 80% of Equinox sales are with the 4cyl.
      • 4 Years Ago
      $2.89 in Jersey, and we don't have to get out of our cars at the pump ;)
      • 4 Years Ago
      I still think it's odd that we Americans expect to find a dealer filled with inventory. Instant gratification....I've been to other countries where there's a handful of stock and you're expected to order one. It's more efficient.
        • 4 Years Ago
        Efficiency isn't exactly the American way unfortunately. :/
      • 4 Years Ago
      I had three vehicles when the gas price crunch hit me. I had a Chevy S10, Pontiac Grand Am, and a Toyota Tercel. The first two became yard ornaments at best. The Tercel had no a/c and was in need of some work and was hard on me getting in and out of it. So I bought a Toyota ECHO with automatic transmission and an a/c. Sold the Grand Am and the Tercel. I always need a truck for something so I kept it. Best decision I ever made. I miss the Grand Am somewhat because it was a really nice GT. But when all you can do is look at it then its not really worth it. I am going to stick it out with these two for now. A car is not a good investment in these days we are in. The ECHO IS PROBABLY A GOOD INVESTMENT. I put a lot of miles on a car but I am willing to bet that when I decide to part with it I will get at least what I paid for it. And when I do part with it you can bet that the car I get will get at least 50 mpg in combined use. I am not even looking at a car that gets less than 40 mpg combined.
      • 4 Years Ago
      IMO the whole idea of having a bunch of new cars in stock is silly anyway. If am going to pay the huge premium for a brand new vehicle, I am going to order it exactly to my specifications. If I am willing to settle for "what's on the lot" then I'll go used and save a ton of $.
        • 4 Years Ago
        The problem with ordering a vehicle is that you have to wait for months to receive it. If I'm looking at buying a new car (just like I did a few weeks ago) I do a 250 mile radius search around my zip code. Chances are I'll find exactly what I'm looking for. I also look at the lowest prices and then call the dealer that has the car in stock that I'm interested in and negotiate the price over the phone using the lowest prices I've found as benchmark. Chances are the dealer will match or come very close to that price if they really want to make a sale. So, I get what I want at the best price. If you don't want to drive over there to pick it up, another option is to go to your local dealer, negotiate a price and have them look into making a car swap with other out-of-town dealers (that happens all the time).
      • 4 Years Ago
      Indeed, do people learn. Our new Equinox with the direct injection 4 cylinder (the only motor they should offer gets 35 mpg at 70, and 30 at 80. It gets around 25 in town. Its better than Lexus quiet. Handles better than most cheap sports cars. Carrys plenty of stuff...plenty. Leather, XM/Siri, electric tail gate, etc.
      So stop buying the next size up...its just a waste.
      • 4 Years Ago
      Nowadays CUV's are more popular than SUV's.
      • 4 Years Ago
      We are once again facing a looming economic apocalypse: the return of rapacious oil price speculation. This egregious situation demands the immediate attention of our elected leaders to correct the horrendous mistakes of the past. Oil speculation in 2008 was the last straw that precipitated the severe worldwide recession, and is now returning and threatening to destroy the fragile economy and bring about a double-dip recession.

      What most people don’t know is that U.S. margin rules of the Commodity Futures Trading Commission allow speculators to buy a crude oil futures contract on the Nymex, by having to pay only 6% of the value of the contract. This means that a hedge fund only needs to put up $1 to control $16 worth of oil futures. This is unique to oil among all commodities, and this extreme leverage of 16 to 1 drove oil prices to wildly unrealistic levels in 2008, and is happening again. This loophole and inequity must be stopped immediately.

      As many economic experts have testified before Congress, the vast majority of oil futures trading now comes not from end-users but from unregulated futures speculation by predatory hedge funds, banks and financial groups using futures exchanges and uncontrolled inter-bank or Over-The-Counter trading to avoid scrutiny. Hedge fund managers have testified before Congress and admitted that their speculation had driven prices. While “demand in China” is certainly a factor, it is not this which is fueling the current immediate price increase – oil trading is done in U.S. dollars and largely on U.S. financial exchanges by U.S. hedge funds. Yet, no action has been taken to protect the American people.

      The price of gasoline is rising again, in contrary to the fundamentals of supply and demand, just as it did in 2008. I have the misfortune of having to extensively interact with many hedge fund managers. They have boasted of their driving up the price of oil in 2008. They have greedily looked for and openly talk of the opportunity to “reinflate the bubble”, and are now gleefully rubbing their hands in repeating that disaster. They have taken Presidential and Congressional inaction on this issue to be tacit approval to once again do the same thing. This artificial manipulation of the oil market must be stopped immediately.

      Of course the supply of oil in the Earth’s crust is limited, and will run out – in the foreseeable future – and alternative sources of energy must be developed. However, that is not what is happening today. If you do not want to see gas prices exceed $4 (or $5, or higher) a gallon in the near term – and for your hard-earned money to be siphoned off into the pockets of hedge-fund managers and oil companies – write to your Congressional representatives and Senators and demand that they immediately put forth legislation to direct the CFTC to eliminate the 16 to 1 leverage allowed for oil speculation, which will allow the price of oil to reflect true supply and demand. Hedge funds avariciously plundered our country and stole from the American people for their own personal profit, and cannot be allowed to destroy the fragile and floundering economy. I personally heard it from many of these charming people…. This is not about people wanting to drive big SUV’s – this is about preventing the collapse of the U.S. economy, and protecting our ability to simply live. Oil is a strategic resource for which financial manipulation cannot be allowed – our needs must come before the influence of oil industry lobbying money. This single action would do more to help rejuvenate the economy than anything else. Artificially high oil prices cost Americans hundreds of millions of dollars per day – money which is once again being siphoned to oil related companies, which could otherwise go to rebuilding the economy.

      While no one wants taxes increased, if we were able to take a long view, at the same time this also presents a unique opportunity to enable a true energy independence plan. If oil speculation were ended and the price of oil dropped to its current supply-and-demand level of around $30-$40, the price of gas at the pump would also likewise drop significantly. The federal tax on gasoline could be increased – which would still keep pump prices below where they are today – and the tax revenues dedicated to implementing a true energy independence program based on solar, wind, and renewable biofuels (or even coal liquefaction in the short to intermediate term). With all the money that was unproductively wasted on the TARP program and various corporate bailouts, and the current climate of reducing governm
      • 4 Years Ago
      In 2004-6 every "disturbance" in the Gulf of Mexico caused a spike in the price at the pump. Then 2010 BP spilt oil all over the gulf, lost a rig and no change in the price at the pump what-so-ever. Now that our goverment has bought GM and the Volt is ready to go to market oil prices need to go up.
      Does any of this strike anybody as being a f+++ing Scam??? WTF?
      I knew that this would happen. As soon as the volt is ready for mass release the price of gas would suddenly go through the roof. Coincidence? I think not!
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