Despite lower gas prices in November, demand for SUVs has faded while sales of pickup trucks have rebounded strongly. Somehow, the spike in gas prices didn’t make pickup trucks uncool. Why? Utility.
Thanks to the huge spike in the price at the pump in the first half of the year, SUV sales are down more than 40% in 2008 from 2007. In response, the not-so-Big Three have closed many plants dedicated to making SUVs, a product that has come to symbolize their perceived inability to produce the vehicles American consumers want to buy.
Writing on his New York Times "Freakonomics" blog, Steven D. Levitt asks the question:
“The apparent cause of death for SUV’s was high gas prices. Doesn’t that mean that with low gas prices SUV sales should come back to life?”
Levitt goes on to suggest the reason SUV sales haven’t recovered is both a fear gas prices will rebound as well as a belief: “When gas prices got high, it became uncool to own an SUV.”
The SUV may be dead, but the humble pickup truck doesn’t appear to be suffering the same fate — because, for many buyers, trucks aren’t a fad, they’re actually a useful vehicle.
Keep in mind that in the current market problem of a lack of credit is being seen across the board — sales are down for every single vehicle in the marketplace. So the way to determine sales strength at the moment is to peg one vehicle's sales drop to another. So, while sales of the historically top-selling Ford F-Series pickup are down 25.4% for the first 11 months of 2008 compared to the same time period in 2007, they’re only down 18.4% when comparing November, 2008 to November, 2007. That's a lower drop in sales than that seen by the Toyota Camry, down 5.3% over the first 11 months of the year, but down 28.7% during the this past month.
So what does that potentially tell us? It would seem possible that the recovery in sales can be pegged to gas prices; as the economy collapsed in October, gas prices fell and consequently, pickup truck sales began to increase, and the sales of mid-size econo-sedans dropped. But, what we're also seeing is while some SUVs have recovered sales, for the most part, they haven't quite followed that same number, and appear to be continuing their decline.
Indeed, that trend can be tracked across other popular pickups and cars. The Chevy Silverado was only down 22.5% November to November while the Honda Accord was down 38.1% and the fuel-efficient Toyota Prius fell a staggering 48.3%.
What does this all mean? It appears that while people do stop buying pickups when gas prices spike, they’re more resilient long term than SUVs because they’re more useful. When gas prices drop, it looks like Americans still want to buy bigger vehicles, but now, they demand actually utility from their trucks, either by necessity or fashion.
The larger picture? Throughout the whole Carpocalypse, American automakers have always been building the vehicles Americans wanted to buy, it’s just they weren’t building the vehicles Americans thought they could afford to own.
[via The New York Times, data: Automotive News]