Despite Rising Gas Prices, SUV Sales Remain Strong in 2010

December 31, 2010

What will it take for American to make a big shift to significantly greener cars?

Gas prices are up, but the public is not yet feeling the pinch at the pump. According to Autodata figures, sales of midsize SUVs and crossover utility vehicles (CUVs) are stronger than ever and small cars sales are flat. From January through November, car and light-truck sales climbed 12 percent, led by midsize sport utilities like the Jeep Grand Cherokee and Honda Pilot. Toyota Prius sales, in contrast, dropped by 1.7 percent during the same time period.

The cost of fuel is expected to continue the trend established in 2010, but it’s uncertain how consumers will respond. During the course of 2010, crude oil went up 15 percent and retail gas prices followed along—rising 17 percent. (Diesel went up 20 percent.) The national average price per gallon topped $3 as the year ended. Analysts are predicting the $100 threshold will be breeched soon in 2011—with China’s expected move to boost its petroleum reserves making sure that oil prices don’t retreat.

Market analysts will be keeping a close eye on the market’s two new groundbreaking plug-in cars, the Nissan LEAF and Chevy Volt. The environment and efficiency are the main selling points for the plug-ins, as opposed to the versatility of an SUV or crossover. But some dealers believe rising gas prices will simply move consumers toward a new generation of car-based crossovers—like the Ford Escape, Chevy Equinox, Honda CR-V and Toyota RAV4—that offer 30-plus highway fuel economy with plenty of room and road capability. Dealers are already noticing what they term a “cool down” of interest in larger SUVs and large trucks as gas prices rose during the year.

New York dealer Dennis Egglefield, owner of Egglefield Ford in Elizabethtown, said SUV sales dropped by half during 2008′s gasoline price spike, but have since leveled out. Egglefield Ford is located in the Adirondack Mountains about 100 miles south of Montreal—a region where four-wheel drive is desirable. Egglefield said that he has noticed more people choosing the Escape over the larger Explorer or Expedition. “SUVs are still important in this area, but people are downsizing to more fuel efficient SUVs instead,” he said.

Meanwhile, automakers are striving to make larger SUVs more appealing in times of high gas prices, with steps such as Ford’s Eco-Boost engine in the new Ford Explorer offering a 30 percent fuel economy jump from previous models.

Tipping Points and Game Changers

So the coming year may be a repeat of 2010: the headlines will go to the so-called “game changers” like Volt and LEAF—as well as new hybrid introductions—while the heart of the market makes more modest shifts toward new models with all the features consumers want, but with slightly better fuel efficiency.

Of course, all of this could quickly change if predictions from the former president of Shell Oil, John Hofmeister, come true. He believes Americans will be paying $5 per gallon for gas by 2012 due to growing demand for oil, tighter supplies and inadequate responses by the U.S. government. Hofmeister said that our lack of federal energy policy will lead to “blackouts, brownouts, gas lines, and rationing.” If this comes to pass, the slow shift from large SUVs to medium-sized SUVs—and the incremental move to slightly greener cars—could become a mad rush to the most efficient hybrids, plug-in hybrids and electric cars.


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  • Anonymous

    Its the sales of CUVs that has increased a lot, SUVs have continued their downward trend. Autodata clubs some of the CUVs as SUVs which is wrong and misleading.
    For ex – Jeep Grand Cherokee is built on Unibody platform, hence its a CUV, but autodata considers it as SUV. Thats misleading.

    Its true that the CUVs like CR-V, Escape, Equinox with their 30 + MPG have captured a big chunk of the market. Meanwhile Exporer is redesigned as a CUV. Pretty soon, the even smaller and high mileage CUVs will start eating into the market of sedans.

  • Anonymous

    Dont worry about Hybrids.

    A base model of Prius & Insight has been launched which costs around 1,500 lesser and this will significantly boost the Hybrid sales this year.

    Remember the year 2010 ends with oil price of $91 + / barrel and the gas prices above $3.07 / gallon.

  • Anonymous

    It makes lot more sense to buy a Insight which starts at 18,200 instead of a Civic-Automatic which starts at 16,600.

    Civic’s average mileage is 30/gallon while that of Insight is 40/gallon.
    You will easily get the $1,600 extra in a short period of time.

    If people think about this, there will be a big increase in Insight and overall Hybrid sales. Similar comparison between Prius & Matrix will deal in Prius favor.

  • Yegor

    “Despite Rising Gas Prices, SUV Sales Remain Strong in 2010″
    1. It means that people think that $3 / gallon does not justify a higher price of Hybrid.
    2. In mid-size class Hybrid selection is very limited and much more expensive than none-hybrids.
    3. People do not think that gas price will continue to increase but for sure it will.

  • Anonymous

    Yegor

    I guess you are from Russia. Seems a Russian is going to sell a Natgas based Hybrid car and sell it for US $ 14,000. It will make a person wonder how come a Russian company could sell such an advanced vehicle for such an affordable cost.

    I am not surprised as they could make the Jet planes and Nuclear reactors at an affordable cost.

    Meanwhile Renault (Nissan’s partner) is selling Kangoo EV for just Euro 20,000 (US $ 26,000) and it has 100 mile range.

    Sadly many Americans still believe that the gas prices will come down, they totally remain ignorant of the fact that 50,000 new vehicles are hitting the Roads in China everyday.

  • Pierre

    ‘A base model of Prius …’

    Not sure what you meant, the lowest priced Prius on Toyota web site is Prius II, starts from $22,800.

  • Charles

    Yegor,

    I am not so sure about the limited and overpriced mid-size selection of hybrids. According to the WSJ the Camry, Altima, Fusion, Accord, Sonata and Malibu (in decreasing sales order) were in the top 20 sales for November of 2010. So four of the top five are now available as real hybrids. Plus the Prius counts as a mid-size according to the EPA. So I think the selection is not very limited. As for cost, the hybrids are on par with the V6 versions of the non-hybrids. The Lincoln hybrid is the same price as the V6. The hybrids are expensive compared to the base models, but that is not a fair comparison.

    I would like to see more and less expensive hybrids, but I think the mid-size family sedan market is very competitive.

  • Caroll

    CUV or SUV I won’t buy any new car unless it’s rated at least 35 mpg highway and I will prefer 40 mpg or higher. When more people start thinking like this the fuel economy will improve.
    As far as Hybrid cost I can get a year old Prius for under 20K. Right now on Craigslist there are quite a few one or two year old Prius’s that would save some drivers their payment in gas cost compared to some 15 mpg gas pig if you drive quite a bit.

  • Anonymous

    Anonymous says:
    “Its the sales of CUVs that has increased a lot, SUVs have continued their downward trend. Autodata clubs some of the CUVs as SUVs which is wrong and misleading.
    For ex – Jeep Grand Cherokee is built on Unibody platform, hence its a CUV, but autodata considers it as SUV. Thats misleading.

    Its true that the CUVs like CR-V, Escape, Equinox with their 30 + MPG have captured a big chunk of the market. Meanwhile Exporer is redesigned as a CUV. Pretty soon, the even smaller and high mileage CUVs will start eating into the market of sedans.”
    _________

    give me a break. just because it’s now so call car based and marketed as cuv does not magically make the notorious suv name disappear. this is purely an automotive greenwashing gimmick. functionally most of cuvs are suvs (i.e. gas guzzlers like jeep grand cherokee with combined city/hwy of 18 mph). notice how wikipedia identifies suv within the cuv category. (http://en.wikipedia.org/wiki/Crossover_%28automobile%29#Crossover_examples)

    equinox with 30+ mpg? oh, yea, that’s only on the highway, and only if you buy the 2WD base engine. as soon as you hit the city you get puny 22 mpg and an epa combined 26 mpg. escape? unless you are buying a hybrid escape, the best epa estimate is 23 cty/28 hwy. crv? 21 cty/28 hwy. what a joke.

    the automotive industry likes to play this game call muddy the waters by calling it a cuv and make bunch of models with wide range of fuel efficiency but only quote the highest number on a model people rarely buys. sorry dudes, i’m not buying it.

  • plugins now

    while US gas prices are highly subsidized to artificially distort the US care market, and as automakers’ profit margins are much higher for suv/cuvs/ etc..i.e. the larger the better for them, they will continue to push these products regardless of gas prices.

    It is up to american consumers ourselves to be more intelligent and have foresight…and demand better lives for ourselves; not marketing gimmicks and giant tank vehicles which will be dinosaurs very soon…

    remember this is the highest ever year ending gas price in the US and still 1/3 the price of rest of the world. while we import most of our oil…..it will come back to bite the a(* of those buying any giant fuel sucker now.

  • plugins now

    I have saved over three grand just in not having to buy gas and prop up dictators who hate us in one year driving my 2010 prius compared to old truck, and as I have driven 30k miles.

    Plus I have saved on only having to have three oil changes as 2010 prius only needs oil change every 10,000 miles as it uses zero weight oil….these saving will compound and enable purchase of leaf or some other all elec. when it ever comes avail in my backwards area with supporting chargers and maybe increased range. something to look forward to….besides high speed rail when I travel anywhere outside US (only a fantasy in the US).

  • Shines

    Gas prices are predicted to reach $4.00 a gallon this year. The poor suckers who stretched their budgets to get their big pickups or SUVs (and CUVs-whatever) will become painfully aware of their mistake as they have to spend $50.00-60.00+ a week on gas. By the end of 2011 used car lots will once again be offering these gas guzzlers at “huge Savings”. LOL
    Those of us that bought hybrids and other fuel efficient vehicles will be glad we did.

  • Pierre

    @Charles: “According to the WSJ the Camry, Altima, Fusion, Accord, Sonata and Malibu (in decreasing sales order)… “

    According to WSJ, YTD sales:
    Toyota Camry 296.6k
    Honda Accord 253.1k
    Nissan Altima 206.2k
    Ford Fusion 196.6k
    Hyundai Sonata 180.7k

    BTW, I thought none of them – hybrid mid-size sedans – sold in any significant number this year. The only exception may be Ford Fusion, which according to this (http://green.autoblog.com/2010/11/24/obama-administration-buys-a-quarter-of-all-hybrids-sold-by-ford/)
    a quarter of hybrids from Ford and GM were bought by the U.S. government.

  • sarah123456

    I believe the gas prices are finally just starting to get high enough where people will feel they need a more fuel efficient car. Anything that is under $3.50 people don’t worry about but anything over people will starting complaining.

    sarah
    online master of science in nursing

  • Pierre

    Transportation accounts for about 20% emission in the U.S., only.
    This may have a bigger impact than to ‘hybridize’ every car coming in the future.

    “Collectively, electric utilities and oil refineries account for almost 40 percent of U.S. greenhouse gas emissions: Under the agreement, EPA will propose new performance standards for power plants in July 2011 and for refineries in December 2011. “
    S F Chronicle (http://articles.sfgate.com/2010-12-24/news/25547488_1_greenhouse-gas-emissions-power-plants-epa-administrator-lisa-jackson)

  • Anonymous

    Pierre,

    i don’t see where the 20% is mentioned in the article. is your quoted 20% from transportation in addition to the 40% from oil refineries and utlities? in other words, is transportation really higher than the 20% since it uses a lot of the 40% from refineries?

    these numbers need context to make sense.

  • Pierre

    Hi. The 20% figure is I remember off the top of my head. Can’t remember where it comes from.
    However, according to this (http://www.eia.doe.gov/oiaf/1605/ggrpt/) which for the year 2008 [details may vary from one source to the other, therefore can't match exactly to the SFC article, the importance is the big picture]:
    by sector
    - the electric power sector is the largest source, accounting for 40.6 percent of all energy-related CO2 emissions;
    - the transportation sector is the second-largest source, at 33.1 percent of the total. Those emissions are principally from the combustion of motor gasoline, diesel fuel, and jet fuel [note: I think it includes all sorts of transportation: public, freight (rail and over the road), ships and planes].
    by type of fuel
    - coal is the second-largest fossil fuel contributor, at 36.5 percent.

    Last but not least, products from refineries, I think, include more than gasoline and diesel. They also include petro-chemical products like plastic, polyester, fertilizer and pesticide, etc.

  • Anonymous

    thanks pierre. that link was helpful.

    as i suspected, the transportation sector does contribute more than 20% of CO2…

  • Big Dog

    I don’t think SUV sales are ever going to slow down in the USA. Just check out your local used car dealer , their packed with SUV’s! As long as Americans continue to want huge vehicles, the manufactures are going to keep making them!

  • Online RN to BSN

    People in US love their SUVs and most likely not going to give them up even if gas price would hit $8

  • <a href="http://onlineuticacollege.com/">Nurse Student</a>

    Maybe people are having too many kids ? We really need to Nurse the environment back to life with hybrid cars