Chapter 2 - SUV and Truck Sales Plummet

http://www.washingtonpost.com/wp-dyn/content/article/2008/05/01/AR2008050103773.html

Summary

In recent months, the sale of SUVs and other large vehicles have declined significantly. The rapidly increasing price of gas has changed consumer preferences towards large vehicles. Prime manufacturers of SUVs and Trucks such as Chevrolet and General Motors, have suffered great loses. According to GM, their SUV and truck sales are 27 percent below norm. On the other hand, Toyota cars have had a 3 percent increase in sales. The majority of consumers are deserting their large vehicles and opting to buy smaller cars. Consequently, many manufacturers will change the type of cars they produce according to consumer preferences. The production of smaller cars, as well as hybrids, is increasing considerably.

Connections

To any vehicle, gas is a complementary product. The declining supply of crude oil has caused the price of gas to rise immensely around the globe. Since gas is required to run cars, the cost of driving has therefore increased. As a result of the change in price of gas, a complementary product, consumers are choosing to drive vehicles which use a small amount of gas in comparison to larger vehicles. Hence, the demand for SUVs and trucks has declined. On a side note, there has been a recent global economic recession. This will affect the decision to buy a vehicle for many families as they may expect a lower income in the future. As a result of these situations, the price of large vehicles has dropped drastically.

Reflection

Since gas is in limited supply, the price of gas will continue to increase. In addition to the global economic recession, it is not surprising that consumers are choosing, and will probably continue to choose in the future, cars which are more fuel efficient. For some, replacing their SUVs and trucks may be more expensive than simply suffering high gas prices. This is the result of a significant drop in value of large vehicles. For example, if a Land Rover LR3 used $1000 more a year in gas than a Toyota Camry, it would result in $5000 of extra money spent on gas for a period of five years. The prices of large vehicles however, are dropping by the thousands every month. Although the rising price of gas has caused trouble for many consumers, I feel that the shift in the preference of vehicles will help publicize the need for more environmentally friendly cars. More money will be allocated in research of hybrids and other fuel efficient cars, a great advantage for our hope of a green future.