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Page added on September 14, 2013
Could Big-SUV Boom Hint At Fruits Of U.S. ‘Energy Security’?
Full-size SUVs rather suddenly are notching some of the biggest sales increases in the sizzling U.S. market these days, at least on a percentage basis.
And with Americans’ growing sense of “energy security” because of burgeoning domestic gasoline supplies, and prices that are moderating somewhat, this trend might be just a harbinger of a further comeback for the automotive behemoths that many believed would be permanently relegated to the sidelines by $4-a-gallon gas and worries about “peak oil.”
General Motors GM -0.85% certainly is betting on a continuation of the big-SUV snapback: This week, unembarrassed, it unveiled the 2015 Chevrolet Suburban and Tahoe, along with their platform mates, the GMC Yukon and Yukon XL. It was only in 2009, as gasoline prices spiked past $4 a gallon, that GM executives had considered abandoning the big-SUV market altogether.
And while sales volumes for the models have been halved since 2005, GM certainly seems to be bullish enough about their future to invest in new, more aerodynamic designs for the vehicles, which are staged on the same platform as the company’s recently launched, overhauled pickup trucks. The new big-SUV versions have more room and improved interiors as well, a quieter ride, more power and better fuel economy.
Meanwhile, over at Ford, the company “can’t build enough” of its recently revised Explorer SUV, Amy Marentic, group marketing manager for global cars and crossovers, told me.
Consider these year-to-date sales figures through August for some of the biggest (and oldest) SUVs in the U.S. market:
- Chevrolet Tahoe, up 22 percent to 54,794 units
- Dodge Durango, up 47 percent to 39,686 units
- Ford Explorer, up 22 percent to 122,192 units
- GMC Yukon XL, up 54 percent to 20,626 units
- Honda Pilot, up 21 percent to 90,696 units
- Toyota Highlander, up 8 percent to 85,700 units
- Toyota Sequoia, up 9 percent to 9,045 units
What’s going on? Surely the general rise in auto sales and the stubborn improvement in the U.S. economy, as well as reliable ol’ “pent-up demand,” are boosting sales even of these aged nameplates just as surely as for the rest of the market. Also, moderating gasoline prices could be considered especially helpful in creating more demand for vehicles that get the worst mileage.
But on that score, there might be even more afoot — and a factor that could come into greater play for large SUVs, especially over the long term. As I argued this week in a piece for the Detroit News Think section (and please read it for my complete argument), thanks to horizontal drilling and hydraulic fracturing, or “fracking,” the auto industry is at a turning point with energy that could be similar in magnitude to the oil-price shocks of the Seventies. Notwithstanding some environmental concerns, newly accessible oil and natural-gas resources are being loosed across the United States at such a rate that the nation essentially now is awash in them.
During the Seventies, tremendous anxieties about the source and price of gasoline reshaped the auto industry and traumatized American consumers. We internalized the idea of a dangerous vulnerability to “foreign oil imports,” which in turn helped determine everything from the auto industry’s vehicle downsizing to the U.S. military focus on the Middle East, for decades to come.
Could it be that the accelerating turnabout in U.S. oil and gas production and proved reserves — making America flush in domestic supplies for as far ahead as anyone can foresee — could influence some sort of reversal in perspective, or at least a change in direction? This phenomenon already has practically vanquished talk of peak oil and nearly rolled back worries about where our next tank of gasoline is going to come from.
To be sure, the Obama administration’s mandate is still in place for each automaker to reach Corporate Average Fuel Economy (CAFE) of 54.5 mpg by 2025, and the auto industry globally is headed relentlessly in the direction of continuing to boost fuel efficiency across the board and in every way. Meanwhile, Americans continue to be concerned about greenhouse-gas emissions. There clearly is a long-term future for electric vehicles in an increasingly urbanized nation, even though — notwithstanding the one-off success of Tesla — rank-and-file Americans don’t yet feel compelled to go out and buy an EV. Natural gas is moving quickly into view as a mainstream vehicle fuel, perhaps in the very near term.
But it’s looking increasingly possible that moderating gasoline prices, a sense of energy “security” and a predictable increase in family formation by Millennials will cause today’s consumer enthusiasm for small vehicles to fade somewhat.
And, just maybe, these factors may fuel even more interest in full-size SUVs. The Chevy Suburban may not be a complete dinosaur after all.
14 Comments on "Could Big-SUV Boom Hint At Fruits Of U.S. ‘Energy Security’?"
J-Gav on Sat, 14th Sep 2013 12:11 pm
The on-going obsession of Americans for these clown cars is just one more indication of how far they’ve gone down the road to brainwashed acceptance of capitalist propaganda.
curlyq3 on Sat, 14th Sep 2013 1:45 pm
“Could Big-SUV Boom Hint At Fruits Of U.S. ‘Energy Security’?” … the hint I have is these folks will not be driving as much as they would like due to lower MPG of these “Rolling Living Rooms” … they are nice to ride in though … curlyq3
Roger Vaughan on Sat, 14th Sep 2013 2:11 pm
On my last visit to the US I had asked a number of folk their opinion of “Peak Oil”. Around 98% of those asked had no idea as to what I was referring.
Many of my American friends have had their life savings devastated during the peak of the Financial Crisis. There appears to be a lack of hope regarding their future financial security and more specifically, retirement. Most feel that they may never recoup their lost investments.
Given the above scenario their feeling is, “since I will never be able to retire, then why not have a new car and lots of “stuff”. My guess is that attitude could very well be the prime driver in new car sales.
rollin on Sat, 14th Sep 2013 2:36 pm
Hey everybody, the media says oil is booming in the US. Don’t you believe them? 🙂
Actually, this is probably just replacements for the older SUV’s they didn’t replace due to the recession.
Lots of pick-ups too, but they don’t haul the kids too well. So dad has the pick-up and soccer mom has the SUV. Practical vehicles that get too low mpg for the times. Good for plowing snow, hauling lumber, hauling the local kids to soccer practice and lots of tasks you can not do with a little 4 banger tin-foil rattle trap.
Problem is that they use them for commuting, need to ride share. Two commuters in an SUV beats most small cars with one. Three beats using the train. Four beats the Prius.
BillT on Sat, 14th Sep 2013 2:43 pm
You do know that the US gov’t is making these death boxes available through the same loan system that sold houses to people with no income or equity? Does that tell you how desperate the auto industry is and the need for the gov’t to make it seem like the US is recovering. Dream on!
SilentRunning on Sat, 14th Sep 2013 3:14 pm
SURE – All you need to accept is that almost $4 a gallon gas price is “moderating somewhat” and that we’ll have “energy security” from the flash-in-the-pan burst of oil production from wells that peter out after 1 year – and then yes you might go out and buy yourself a gigantic gas-guzzling SUV.
Given that there are a fair number of sheeple in the USA who still have enough cash-on-hand/credit rating to buy such a thing – it’s not surprising that gas guzzlers are making a small rebound.
Look for those folks to be in for a rude awakening when “moderately priced” gas inches towards 6 or 7 dollars a gallon, and it suddenly costs in excess of $150 to fill the tank – and “energy security” is exposed to be “energy vulnerability”.
DMyers on Sat, 14th Sep 2013 3:15 pm
“Also, moderating gasoline prices could be considered especially helpful in creating more demand for vehicles that get the worst mileage.” [quoting from the article] Well, maybe he has a point there. But the following is the real kicker and embedded summary of his main point.
“Could it be that the accelerating turnabout in U.S. oil and gas production and proved reserves — making America flush in domestic supplies for as far ahead as anyone can foresee — could influence some sort of reversal in perspective, or at least a change in direction? This phenomenon already has practically vanquished talk of peak oil and nearly rolled back worries about where our next tank of gasoline is going to come from.”
That we’re flush in domestic supplies for the foreseeable future is treated as an established fact, and peak oil is a “vanquished” idea. From this, I would conclude that the writer is disconnected from reality, and so more must be the general public, which partly explains the demand for these “worst mileage” vehicles.
These are my five top reasons for SUV demand at the present time in the USA:
1. People in this country remain child like in certain respects throughout their lives. One expression of this is the desire to have the biggest of any category of objects. This would include cars, houses, TVs, boats, and firearms.
2. There is a powerful cultural, sociological, and psychological inertia of maintaining things as they are and have been recently.
3. Related to number two is a stubborn insistence that things haven’t changed, except in the minds of environmental nuts and nerds; a financial investment in the status quo is a vote for the continuing trajectory of progress.
4. There is a powerful mandate in our society for having at least the equivalent of what others have or, better yet, one up. That big SUV, with its high in the air pilot’s nest, produces immediate social status for the owner and inferiority in the envious neighbor, curable only by ownership of an equally massive mass.
5. People feel safer in SUVs and for a good reason. The elevated driver position and mass of steel below vastly increase the chances of survival in a collision with a smaller car.
When the price of gasoline hits five dollars a gallon, the SUV spike of 2013 will plunge rapidly back to baseline and may even drop off the chart.
GregT on Sat, 14th Sep 2013 3:29 pm
Gasoline is over $5.50 per gallon here in BC, and full size pickups and SUVs dominate the single person commuter vehicle. They are a status symbol, nothing more.
DC on Sat, 14th Sep 2013 5:07 pm
When do you think the neo-con Clark gov’t will get around to slapping user fees, pollution taxes or any sort of punitive measure designed to help, in part at least, pay for the costs all those dipshits in those full sized trucks and SUVs externalize onto the people of BC Greg?
It gets worse when you see every 4th or 5th of those fugly toxic mothers hauling around a gas-powered ‘pleasure boat’ behind them that just finishing spewing gas-oil and exhaust, probably into the same lake thats part of your water supply. Thats what BC does. It also spends billions on new cars-only infrastructure, mainly in the lower mainland, but elsewhere as well, to encourage more sprawl, and more car usage now, and into the future. However, it is worth noting that even the most modest of efforts to reduce car-dependency are met with well financed and organized, howls of screaming protests.
See: http://globalnews.ca/news/735754/demonstration-underway-to-protest-public-consultation-for-east-van-bike-lane/
Did any of those folks protest against the billions in taxes and future costs of Vancouvers commitment to more car-sprawl?
I am going to guess, no, they did not.
As Greg and myself are aware, BC actually does have a carbon tax, however, IMO, its is completely ineffective at moderating or changing the behavior of either individuals, much less large companies that consume huge volumes of fuel. In fact, the gov’t gives the money back in the form of rebate cheques.
The only thing those retards at Forbes are hinting is these:
1)The price of a gallon of toxic Ffuel is still WAY TOO CHEAP to moderate peoples behavior(stupidity actually).
2) People behavior(stupidity again) is largely governed through price signals which at current levels and configuration, send the completely wrong signals and information about the damage SUVS, and hosts of other related ‘goods and services’ for those SUVs really do.
Mike999 on Sat, 14th Sep 2013 6:43 pm
These are the same people who bought McMansions with an Alt-A Subprime mortgage, an ARM mortgage. They sell the SUV when gas goes up and buy them when gas goes down. These people LOVE to get wiped out economically, but, love to talk about “personal responsibility” for black people.
Mike999 on Sat, 14th Sep 2013 6:44 pm
Wall Street LOVES to Wipe Out these suckers.
Kenz300 on Sat, 14th Sep 2013 9:02 pm
FORBES —- wishful thinking for the top 1%.
If you are rich enough the price of gas is not the deciding factor in your purchase.
J-Gav on Sat, 14th Sep 2013 10:19 pm
Sorry, I should have clarified my initial comment by saying : “neo-con, financialized capitalism” because capitalism, in and of itself, is, if anything, only slightly worse than most other top-down systems aimed at exploiting and controlling the masses.
Arthur on Mon, 16th Sep 2013 10:14 am
The media tells it’s viewers that the US are going to be the next Saudi-Arabia, so the good times are here again. Until the next Lehman crash or oil price spike.