Gas Prices Drop, American Car Buyers Forego Economy
Wow, how quickly we forget… After a month of “low” gas prices (which is to say high, but not as high as they’ve been) Americans have seemingly forgotten their newfound love for cars with good gas mileage and reverted to buying gas guzzling beasts. That’s right, sales of Chevy Tahoes and Suburbans as well as Cadillac Escalades went up 2-3X in October as compared to a year ago. Similarly, Ford Expedition and Lincoln Navigator sales jumped 40%, and Jeep sales went up 29%. On the downside, sales of the economical Chevy Aveo and Cobalt fell 30-40%, and the Toyota Prius dropped nearly 9%. Do we deserve high gas prices, or what?
It’s important to keep in mind that these are year-over-year numbers, so the effect of the new model year and/or seasonality should be (mostly) neutralized. To be fair, it appears that car sales were up in general during October, but it certainly seems like a disproportionate amount of that growth went on in the mega-car categories. The only silver lining in all of this is that Hummer sales were flat.
[Source: CNN Money via pfBlueprint]
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Doesn’t matter we’re heading towards higher prices in general. But people will quickly next summer run back to the small cars, and then to hybrids. It’s just we have more disposable income now than previous generations.
I couldn’t believe this summer I think my car didn’t depreciate, a 99 toyota corolla, guess I’ll have to keep it forever. But DH’s 2000 ford focus, ugh, ugh ugh. That thing is a piece of crap, wish it would die.
Comment by J — Nov 3rd 2006 @ 11:03 pmComparing to last year is something of a bogus comparison, since last October was just after Katrina and the world gas scare. And Priuses are somewhat falling out of favor since they don’t really get the lofty gas mileage they claim. It was arguably a sort of “bubble” for high-mileage cars and an artificial depression for SUVs.
A more interesting comparison would be to October 2005, to see what’s happened since then.
Comment by Foobarista — Nov 4th 2006 @ 12:19 amMy car is pretty good on gas. Even though the price is now down to $1.98 per gallon am still very careful about my driving. I run most of my errands when I get to my part-time job. Once I get home and go into the parking lot that is it for the rest of the night. I see to many of my freinds get up and drive around just because they have a car. They think nothing of gas prices, mileage etc.
Funny thing happened recently. After my accident I went to get a rental. My first question to the guy at Enterprise was ‘ what is the mpg on that car?’ Huh? MPG? what is that?
Are you kidding me? I could not believe he had no idea what I was talking about.
I think too many of us have short term memories which would probably explain te increase in sales of SUVs. I could never justify having one of those things.
Comment by tired-of-being-broke — Nov 4th 2006 @ 10:29 amFoobarista, it’s not an unfair comparison at all… Katrina (as well as other things) drove gas prices up which caused people to make smart decisions when it came to which cars they bought. Now that gas prices have fallen a bit, people are once again make poor decisions. It just goes to show you how short our country’s memory is… Gas at $2.10/gallon suddenly seems like a bargain.
It is amazing have well the stock market and economy has done in the past couple months when inflation is high, there are crisises around the world, huge deficit spending, Chinese owning so much U.S. government debt, etc.
Green is the way to go. This is the next huge ijndustry and the later we realize this as a country the worse off we will be in the long run.
Comment by Nagel — Nov 4th 2006 @ 11:39 amPeople are simply reacting to market signals. Since Katrina, gas prices have steadily dropped, and may well continue to drop. After all, everyone remembers the 1970s, when many said gas would run out by 1990. Oil hit a speculative bubble that started bursting earlier this year.
This is why I think the only gas price that will work to change behavior is one that is extremely high, ie $6/gal or up. Just after Katrina, many people thought that may actually happen. For many Americans, especially in suburban areas where incomes tend to be higher, gas prices aren’t high enough at $3/gal or less to change behavior.
As for the Prius, there are now several other hybrids, including the Camry hybrid, that compete with it now that weren’t on the market last October. But total hybrid sales are up YOY.
Comment by Foobarista — Nov 4th 2006 @ 5:29 pmBuy ethanol!
Comment by jim — Nov 5th 2006 @ 7:45 pmWSJ article today discussed how last year rebates ended in October for many manufacturers, and compared to October 2004, guzzler sales are down for October 2006.
The American auto makers are not out of the woods yet…
Comment by EdK — Nov 7th 2006 @ 7:20 pmThese days, people buy vehicles that they like. Fuel economy doesn’t bother someone who wants to get an Escalade, because they know it doesn’t get good mileage…they get it because they want it. Most likely due to TV influences…just look at rap videos, sitcoms, etc. Those who sold back their Escalades when gas prices were high most likely weren’t people who could afford the car, but rather people who wanted the car, couldn’t really afford it, and took another hit with the high gas prices forcing them to sell it. I mean, let’s be real…if someone bought a Ferrari, they aren’t going to sell it and buy a Prius because gas went up…they already spend a quarter million dollars on their car.
Comment by Rambling News — Dec 7th 2006 @ 8:07 pm