Bob CollinsSUVs are back!
The October auto sales report, released this morning, shows the continuation of a trend in the United States: Big cars and trucks are back.
Ford Motor Co., Fiat Chrysler Automobiles NV and Nissan Motor Co., reported U.S. sales exceeding analysts’ estimates, largely on the strength of SUV sales.
According to Bloomberg…
GM’s Buick brand had its best October since 2007 as its Encore small SUV posted a 33 percent gain. Sales of the Detroit-based automaker’s Cadillac Escalade rose 30 percent and the Chevrolet Tahoe large SUV was up 6.1 percent last month.
“Utility vehicles, especially small and mid-size, are the story once again, as consumers are buying more and willing to pay more for these models,” Alec Gutierrez, an analyst for Kelley Blue Book, said in an e-mailed statement. “With gas prices at a three-year low and with consumer confidence at a seven-year high, this trend should continue.”
There are a couple of different ways to spin this. One is that Americans have short memories and given low gasoline prices, they’ll splurge and waste their money every time.
But there’s another, regulations requiring more fuel-efficient vehicles have given consumers a break and they don’t have to choose between being able to afford to fill the jalopy and squeezing into tiny clown cars.
“The price of gas per gallon is drastically low — I’m really celebrating and enjoying that at the moment,” said Andrea Turner of Tennessee of her decision to buy a 2014 Buick Encore sport-utility vehicle.
Wasteful excess? The thing gets 33 mph on the highway.
“You just feel so much better when you look at the pump, and you’re pleasantly surprised,” said Jeff Schuster, an analyst for LMC Automotive in Troy, Michigan, who sees a direct link between gasoline prices and small-car sales. “You say, ‘Maybe I’ll splurge on something and treat myself.'”
The trend helps consumers rationalize paying thousands more for a roomy, high-riding SUV than they would for a little car, Schuster said. With automakers due to report October sales next week, SUV sales growth has exceeded that of small cars in each month of this year.
“Right now, gas mileage is not that much of an issue for consumer choice,” said Greg Williams, new-car sales manager at Holman Honda of Fort Lauderdale in Florida.
The fuel standards are a moving target. The latest one, set in 2012, sets 54.5 miles per gallon as the average the auto industry must achieve by 2025. It’s 29.7 mpg now and 35.5 mpg in 2016.
