Large Cars Are Back, Trucks and SUVs Too!

The Unexpected Comeback of Large Vehicles

Who would have thought it? Large cars, trucks, and SUVs are making a strong comeback, thanks to a significant drop in gas prices.

The Rollercoaster of Gas Prices

Before the spike in gas prices last spring, the market for larger vehicles remained robust, even with gas prices hovering around $3 per gallon. However, as prices soared past $4 per gallon just before summer, sales of these vehicles plummeted. Analysts were quick to declare the end of the road for large cars, trucks, and SUVs, predicting a permanent shift towards more fuel-efficient vehicles achieving 30 mpg or better.

The Unexpected Decline in Gas Prices

Contrary to these predictions, gas prices began to fall as summer ended, reaching their lowest levels in five years. This unexpected decline has reignited consumer interest in larger vehicles, especially as incentives for these models remain high, offering some of the best deals in recent memory.

Consumer Behavior and Economic Concerns

"Consumers have reached new levels of concern about the current state of the economy, a fact reflected in the sales numbers we have seen since October," said AutoTrader.com President and CEO Chip Perry. "At the same time, we are seeing new-car shoppers making every dollar count by spending increased time online looking at a larger selection of vehicles to find the right car or truck at the right price."

The Role of Incentives

The selection of vehicles continues to include some of the largest models on the market, such as the new pickup trucks from Dodge and Ford. Perry noted, "Shoppers considering a vehicle purchase in 2009 need to know that credit is available. And for many people who put off a vehicle purchase because of economic uncertainty or because of tight credit, there is pent-up demand."

Online Traffic and Consumer Interest

This pent-up demand is evident in the increased online activity. AutoTrader.com reported a 20% increase in unique visitor traffic in December 2008 compared to the previous year. "People are definitely online looking at vehicles, considering their options, building their consideration sets, and figuring out what they can afford," Perry added. "With a new year, easier access to financing, and this pent-up demand, we should start seeing some positive movement in auto sales in 2009."

December Sales and Incentives

In December 2008, incentives on new cars were among the best ever offered, even during a time when year-end sales are typically the best time to purchase a new car. Despite this, vehicle sales for December 2008 were still down by 36%, suggesting that strong incentives will remain in place for at least the first quarter of the year.

Interesting Stats

• Gas Prices: The average gas price in the U.S. dropped from over $4 per gallon in mid-2008 to around $1.61 per gallon by the end of the year (source).
• Vehicle Sales: Despite the economic downturn, the Ford F-Series remained the best-selling vehicle in the U.S. in 2008, with over 500,000 units sold (source).
• Consumer Behavior: A study by J.D. Power found that 40% of consumers considered fuel efficiency as a top factor in their vehicle purchase decision in 2008, compared to 30% in 2007 (source).

Conclusion

The resurgence of large cars, trucks, and SUVs is a testament to the dynamic nature of the automotive market. While high gas prices once seemed to signal the end for these vehicles, the unexpected decline in fuel costs has breathed new life into their sales. As consumers navigate economic uncertainties and seek the best deals, the demand for larger vehicles remains strong, supported by attractive incentives and increased online research.

Source: AutoTrader.com