Rush to Fuel-Efficient Vehicles Recedes, Edmunds.com Research Suggests

By Scott Doggett August 11, 2008

Hummer400.jpg Large-SUV segment: Could reports of its death have been greatly exaggerated?

The run-up in gas prices from April through June spooked American car buyers into a manic rush to find the most fuel-efficient vehicles they could and to dump their gas guzzlers.

So new-car buyers nearly abandoned the large-SUV and pickup-truck segments, grew lukewarm about crossovers even compared with the first quarter, sought out small cars, pushed OEMs' subcompact-car manufacturing capacity to the max, and completely sucked up supplies of Prius and of some other hybrids. All the while, overall sales tanked.

So automakers made some of the most precipitous and significant decisions ever about production cutbacks and segment reallocations. Each of Detroit's Big Three and even Toyota moved quickly and massively to slash pickup and SUV production and goose small-car output as much as they could.

But the latest Edmunds.com data indicate that the industry may well have rushed into these moves too soon, perhaps overreacting -- along with the news media and other entities -- to how American consumers plainly were responding to skyrocketing gasoline prices.

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blackadder5639 says: 9:47 AM, 08.11.08

Well, it is not surprising and easy to explain.

I strongly believe that the main reason why people rushed to get smaller/efficient cars was not because of $4 to $4.50/gallon gas, but rather the fear that it would increase to $6 or more.

There were other reasons too:
1. Poor economy means people are thinking twice about whether they need that expensive SUV or truck.
2. Over-reacting due to sticker shock at the pump.

With the recent decreases in oil prices and with gas now at about $3.50/gallon, I think the fear of $6/gallon gas has largely gone. People have probably also come to their senses and are no longer over-reacting. This perhaps explains why the rush to fuel efficient vehicles has receded. Of course, the rush is not going to disappear as long as the economy remains in near-recession and fuel stays above $3/gallon.

Yeah, I think manufacturers may also have over-reacted. But I really hope the current research into exciting fuel efficient cars will continue.

greenpony says: 11:47 AM, 08.11.08

"But the latest Edmunds.com data indicate that the industry may well have rushed into these moves too soon, perhaps overreacting -- along with the news media and other entities -- to how American consumers plainly were responding to skyrocketing gasoline prices."

LOL. It's nice to see that the auto manufacturers, if not exactly nimble, are capable of making sweeping changes to their product lines in reaction to fickle consumer demands. What's funny is that all along I've thought that while SUV/truck sales may diminish in the short term, there will ALWAYS be demand for them. The automakers may have lost sight of this in their haste. Props to you, Scott, for adding the media in there, something many media reporters neglect.

"and with gas now at about $3.50/gallon"

Blackadder, I don't know where you live, but I can't find gas below $3.959 around here. The national average is still a whopping $3.81. Gas prices are still high, but I agree with you that it seems like some of the fear is gone.

blackadder5639 says: 2:02 PM, 08.11.08

Greenpony, I live in West Texas. Yesterday, regular was selling for $3.58/gallon.

bmara says: 5:11 PM, 08.11.08

Edmunds and the America public fickle thinking and reaction to a temporary decline in oil price are bad for the industry and the country. How that gas is around $3.80 a gallon. Do we celebrate and go back to big SUV's and pickups. Have we not learned anything in the past few months? China and India are building cars at a rapid pace. It is time to think small and fuel efficient vehicles. You cannot have the auto industry retooling every three months. The price of fuel is only going one way and that is up along with our dependency on foreign oil. This thinking is idiotic.

bmara says: 5:12 PM, 08.11.08

Edmunds and the America public fickle thinking and reaction to a temporary decline in oil price are bad for the industry and the country. How that gas is around $3.80 a gallon. Do we celebrate and go back to big SUV's and pickups. Have we not learned anything in the past few months? China and India are building cars at a rapid pace. It is time to think small and fuel efficient vehicles. You cannot have the auto industry retooling every three months. The price of fuel is only going one way and that is up along with our dependency on foreign oil. This thinking is idiotic.

aeaustin says: 7:29 PM, 08.12.08

Oil and gas prices have no where to go but up. Most industry sources show that very clearly. We are seeing a short term market reaction to a drop in gasoline consumption.

Top oil market guru's are predicting $200/barrel by 2013. Not rocket science given that oil supplies are diminishing and exploration/drilling is getting more expensive.

Buy a cheaper gas guzzler today and you'll be crying again in 2-4 years. Permanently!!

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