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Despite Rising Gas Prices, SUV Sales Remain Strong in 2010
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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.