Commentator menno posted this on the Oil Headed for $225 A Barrel? thread. It's a Hell of a good question, so I ripped it and started this discussion… "By the way, what’s the general consensus of our little group of avid TTACers, as to when the tipping point for the average Joe and Jane driver of America will be, causing them to say ENOUGH! and give up their [full size] SUV’s to go buy something a little more sensible?
$4 a gallon?
$5 a gallon?
$6 a gallon?
$7 a gallon?
or $8 a gallon?"
89 Comments on “QOTD: What Gas Price Kills SUVs?...”
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$5 per gallon will kill them since they are slowly wittling away at $3.50.
Full size SUV’s are making their way to the “slaughter house” with current gas prices, accompanied by rising food prices.
Well.. in Europe gas prices are already about 7-8$ per gallon, and people still buy gas-guzzling (or diesel-guzzling) SUVs and minivans. I guess people just adapt to rising fuel prices without altering their driving habits.
The problem is people who can’t afford the gas prices got their shiney new suv 2 years ago and the prices on them dropped out.. they can’t afford to trade them in either and no dealership wants them. Either park em in the back yard and hope for a classic suv craze in 30 years or let the repo man come
$3+ is already killing them.
The sales numbers are already reflecting this in a big way. It’ll take a few years for the replacement cycle to fully work its way through the marketplace, but might as well start an SUV death watch.
Only people who need a big truck (or who truly have enough $$$ to ignore gas costs) will buy one.
For people who don’t rack up the miles, an extra $/gallon doesn’t matter, but so many people in the US have long commutes or could only marginally afford an SUV to begin with.
$6 is my guess. It’s sad but many people are willing to cut back on things like food quality or their kids’ education, but they refuse to change their driving habits.
I don’t think there will be much “giving up” because of what Frantz alluded to: people are in too deep and will just have to sit this out. They could drive less or use the “other” car (assuming it’s not a large SUV).
However, sales of new SUVs are already tanking, so I think we’ve already passed the tipping point.
It would be interesting to graph SUV sales by size class against gasoline price to see what’s already happened.
Just the fear of prices rising further would keep me from buying an SUV at this point, or anything that might guzzle gas. I mean, maybe a lot of people would still buy SUVs at $3.50-$4, but if they worry, reasonably in my opnion, that prices may rise to $5, they’ll skip it.
I’d put it somewhere between $4-5/gal fuel.
Even after the tipping point when the median car buyer shuns the Urban Assault Vehicle there will still be those out there who want SUVs.
Some many even use them for their intended purpose. Most of the posers who would have had their needs served with a station wagon or minivan will go back to crossovers or whatever marketing weasel word du jour they are being called.
I’ll hang on to my 23-25mpg CRD KJ until Honda or Toyota offer something midsize with AWD that gets >30mpg.
Here’s a novelty: SUVs and trucks can be RENTED.
I just went on a desert adventure vacation using a rented 4Runner.
It was a blast! Even better: I don’t need to own one myself. (Luckily the rental company wasn’t too finicky about the dents in the skid plates)
2004, the United States consumed about 140 billion gallons of gasoline (energy.gov), with gasoline prices around $2.00 a gallon. Approximately 110 million households. That’s about 1272 gallons per family annually, or around $200 a month in gasoline.
Obviously, heavy users could have easily burned $300 or $400 a month.
With the average price of gasoline approaching $4.00 a gallon, that’s an extra $300 or $400 a month that full-size truck/SUV owners and heavy travelers are likely shelling out. While large vehicle sales are hurting, they’re still moving metal.
I would think $5 or $6 a gallon would be sufficient. We’ll see sales drop to the point where the number of models will be hacked down to commercial-grade-only.
I’ve seen it happen in my neighborhood (Edmonton, Canada – we refine the oil!) already: neighbors are trading in their big vans, 4Runners for Yaris’ and Civics.
Of course, I still see lots of brand new Grand Cherokee SRT/8s, Commanders (!!), Hummers and Titans, so not sure if there’s a true reversal.
We have already started to see a huge decline in sales but I think the real drop in sales off a cliff will happen when gas hits $5.50-6/gallon. Right about that time the dollar will be so low and the price of food so high(from the price of oil and ethanol production) that it will really hurt to fill your SUV up one a week $100+. There should be a lot of new alternatives for people to switch too in the next 2-3 years when it happens.
It sucks because I need something will a little more room too it right when gas is going to sky rocket. Oh well I should be able to get myself a nice used truck cheap.
In my case I was and maybe still considering a smaller SUV like the Toyota RAV4 for basic transportation for me and my animals to attend Dog Shows and also yearly visit to the Vets! I have to replace a older GMC Rally Van with a large V*8 that sucks Gasoline, but who would I sell it to? also have a older Camry Sedan, both are paid for and I dont need to go into debt to purchase a new Vehicle but living in a rural area I need a reliable vehicle and the Camry has been super, but I need more space!
Gasoline here in Ontario is currently at Can.$1.20 per litre, more like $5.00 US a gallon. These are interesting times for all of us here in North America!
George, it’s only $4.50 US. You’ve got to remember that the US have their own undersized version of gallons.
I think anyone you see buying a new full size SUV either definitely needs one (or a truck, but the result is the same)for towing or is just so wealthy it doesn’t matter to them. I see most of the people who bought a Tahoe or Expedition from 1999-2004 have moved to Muranos, Edges or Highlanders these days. Not many are going from a big SUV to a car, it’s too much of a jump.
Renting a truck or SUV doesn’t always work. Typically the rental trucks are 1/2 tons and it may not be enough to tow your RV. Plus if you rent more than 6 times a year it ends up costing more than a new vehicle.
Gas prices are going to knock the sales hard, because economics is finally forcing consumers to consider for even a moment how much gas they use in their ridiculously oversized bus-cars.
Another thing that’s impacting sales of SUVs in my opinion is the declining home values and lack of easy credit. Much of the SUV craze was driven by me-too suburbanites battling for neighborhood superiority. I imagine the fact that we can no longer take out a HELOC to finance the purchase of some mega-man superHummer is also killing sales.
Did I mention the economy is in decline and food prices are going up and people aren’t making as much money as they were 8 years ago? Yeah, all that, too.
Asking what price gas will kill SUV sales is like asking what level of taxes will kill cigarette sales. The higher price may force some to wean themselves, but many will come up with the money no matter how how it goes.
Americans will sell their kids to pay for gas, before letting the SUV go … :-)
But for a thorough study on the topic, here’s a link to “Short-Run Gasoline Demand Elasticity, a study”:
http://www.econ.ucdavis.edu/faculty/knittel/papers/gas_demand_083006.pdf
There’s evidence of a shift, compared to previous decades, in that people are modifying their driving behavior. BTW – very difficult to model, as people will rationalize their vehicle use as essential, when it’s non-essential to a deep level.
Hummers, anyone?
Current prices are already pushing people away from SUVs.
My wife drives a 2004 Jeep Grand Cherokee. She only drives to work 2 days a week, so fuel costs aren’t a concern (yet).
We drive my 2007 G35X for weekend trips, we only drive the Jeep if we are going off-road, or taking a ton of stuff for the kid (or if we plan to tow my Uncle’s jet skis).
Current fuel costs are kiling SUVs now. At $4.00/gal SUVs are gone with commercial use being the exception. We aren’t even considering an SUV for the next car. We will probably keep the Jeep as it is paid off, but the next car for the wife will probably be a Mini or a Honda FIT.
-ted
If you figure that the average car owner in the US drives about 13,400 (2007 data from the Fed Hwy Admin) miles a year, every dollar that gas goes up for a 15mpg SUV is an additional $893 annually. Even at 18mpg your still looking at a $744 bump. That’s pretty significant. Right now the difference between a Ford F150 and a std 4dr Honda Civic (I know from first hand experience) is about $1020/year in fuel costs. That gap only gets bigger as fuel costs rise.
Not owning an SUV I can’t honestly answer this, but personally my own threshold was $3 a gallon. When fuel hit that mark is when I went from just playing around with alternative fuels to getting serious about personal independence from petroleum. My target was to be able to run 100% on my own if needed by the time it hit $4 a gallon. I got there right on time. The odd bit is I’ve been driving a 50 MPG car since 2002, and many variations of that going back to 1982 (a rabbit diesel back then.) I’m just true to my Scot heritage and seriously frugal.
My guess is that it has already happened, so the number is about $3-$4 a gallon. In 5 years SUVs will be back down to what they were in the 80 & early 90s… something only bought by people who NEED them.
–chuck
$2.25 should have killed it on merit. But, there is no gainsaying the stupidity of America’s Boomers.
As someone pointed out earlier, at the current rate of gas price increases, the rate of low mileage vehicles (i.e. SUV’s) will approach the same overall sales percentage of that of Europe. Even at $8 per gallon, they will not go away completely. People like being high-up and heavy. It’s a prenatal thing.
I for one prefer low, light with a role-cage.
Just back from a trip to Jacksonville Fl. Saw more Hummers in a week than I had seen in my previous life. So to kill a Hummer will take round about $50.00 /gal or triple and 20 years or so until they wear out and parts aren’t available. Natural or unnatural death of the lardass driver won’t do it since with our tax laws the kids will just get the cash to carry on and they will have been trained in wanting to drive it too. But your local middle class peasant driving a Subrban is dying now.
I think there won’t be a ‘tipping point’ simply because as gas prices rise, the cost of everything else rises and therefore people get paid more. I think that the percentage of one’s income spent of fuel will stay fairly flat for the foreseeable future, as minimum wages have increased, and workers have consistently been getting paid more and more. So, people who can afford now to drive SUVs likely will still be able to afford those vehicles when gas continues to increase in costs. That said, there is the psychological point to be made that paying $150 to fill up the gas tank will be quite a hit emotionally, if not financially. Therefore, there will be an exodus from SUVs, but not because they cost too much to run, but because the owners think they cost to much to run. The only people that will get rid of their SUVs are ones that couldn’t really afford them in the first place.
The gas price won’t get SUVs off the road immediately but as people are ready to trade they will look for a more efficient vehicle. I’d say a long term price of $4 to $5 a gallon should make the SUV a niche vehicle and also get most urban cowboys out of their shiny black and chrome oversize trucks.
Whatever, prices will drop for a brief period and people will buy them again and then whine when prices go up as they inevitably will. It is not like when we had 99 cent gas for that brief period that people didn’t know better, it is just that they don’t care.
Frankly if you own anything over a gas sipping 4 cylinder, you are buying more than you need most likely, and why should anyone else care? I don’t make people subsidize my other hobbies, why should the government subsidize my love of fast cars?
Frank – I doubt SUV ownership is nearly as addictive as nicotine.
…as to when the tipping point for the average Joe and Jane driver of America will be, causing them to say ENOUGH! and give up their
[full size] SUV’sgas guzzlers to go buy something a little more sensible?Fixed that for you.
Why the crossover/SUV hate? Yes, I agree a lot of people don’t need them, but some of the SUVs get better gas mileage than cars we are all lusting after (and not asking to kill off): M3, M5, RS4, any AMG. Add to the fact those cars all take premium where most SUVs take regular and I ask why aren’t we trying to kill off the high powered luxury sedans and sports cars since the people who drive those exhibit the same behavior (if not worse) as the people in SUVs?
With depreciation on new cars, and small used cars selling for a premium, I would hope the answer would be something like $7 or $8/gallon.
Otherwise it’s hard to make a solid financial case for the total cost of ownership. From a pure cash flow POV, though, it has to hurt.
Where I am, the new Explorer/Expedition is dead, and people are even complaining about the mileage on the Edge and Escape. It’s becoming all about cars. Used SUVs are very cheap now, and people who need the space are buying newer, well depreciated ones instead of new.
Too bad we can’t get any Escape Hybrids… and the 09’s won’t be in production until the Fall…and the Fiesta won’t be hear for another year…
jl1280- I think Jacksonville is exceptional for it’s Hummer popularity.
lth- the people who lust after the hi-po German cars don’t buy thousands of them. They buy Civics, Minis, Miatas and Mazda 3s. People actually bought 100s of thousands of huge SUVs. It’s not so much a hate of SUVs as a hate of carmakers who have ignored the development of good small cars for so many years.
It’s the old story of the frog in the pot of water. When you first put him in there, he’s happy. Warm it up a little and he’s still feeling pretty cozy. Warm it up some more and he’s getting a little hot, but it’ll be okay, right? Then it reaches a boil and he’s dead.
But put a frog in boiling water and he’ll jump right out of there.
It’s the same with gas prices. People can stand a lot of economic pain as long as it ramps up slowly. It will take a major shock – like an overnight jump of two or three dollars a gallon – to generate a mass exodus from the SUV. Otherwise SUV owners will just make futile gestures like buying CUVs that aren’t significantly easier on gas anyway. An Equinox is what, 2 mpg better than a Trailblazer? That isn’t going to get it done.
George Labrador: if it’s just a couple of people and the dogs, buy a four-cylinder manual Ranger, put a cap on it, and haul the dogs back there.
I was filling up yesterday and some guy with a shiny new Chevy Avalanche was braying to the attendant (safely ensconced behind Plexiglas) that he’d just had to pay $105 (!!!) to fill up his tank. He was seriously dumbstruck and complained to anyone at the station who would listen. From this anecdotal incident, I hypothesize that $100+ a tank may be the threshold at which a lot of SUV and large truck owners begin to seriously consider a more fuel-efficient vehicle.
the people who lust after the hi-po German cars don’t buy thousands of them. They buy Civics, Minis, Miatas and Mazda 3s. People actually bought 100s of thousands of huge SUVs. It’s not so much a hate of SUVs as a hate of carmakers who have ignored the development of good small cars for so many years.
I agree that people who lust after them don’t buy thousands and I wish the big 3 would have spent money improving their cars. But the generic anti-SUV behavior of people annoys me. They always argue that “SUVs are bad because they get bad gas mileage” or some variation thereof. This is not a good argument. Lots of cars get bad gas mileage and pollute the environment just as much – and people never complain about them.
Cars are never a sensible decision – they are emotional and we impose (flawed) reasoning to rationalize our decision. If we made logical car decisions we’d all be driving the cheapest car with the best gas mileage and not care about anything that makes us love cars (handling, horsepower, nice interior, etc).
At what price will we stop shipping food to stores? At what price will we stop flying aircraft? At what price will you quit driving to the store to buy that $20 loaf of bread? As sheep are led to the slaughter…
BuckD, I hypothesize that “there’s no fixing stupid.” Gas prices have been hopping back and forth over $4/gallon off and on for a while now. If that guy bought the thing, anyway, and he’s surprised at the bill… Well, it’s a shame he’s allowed to vote and procreate.
I think that the percentage of one’s income spent of fuel will stay fairly flat for the foreseeable future, as minimum wages have increased, and workers have consistently been getting paid more and more.
Easy for you to say, living in China or India, as you must (or outer space, maybe?). Over here in the US of A, workers are certainly NOT getting paid more and more.
SUVs have been around since the 1930s and have survived more drastic crises than the current one. For that matter there are many parts of the US where 4wd vehicles like SUVs are quite practical and where more fuel efficient vehicles just wouldn’t work for other reasons. So it may be just a tad early to start writing the SUV obituary.
For that matter, as sales decline, expect dealers and manufacturers to offer more and more incentives, at some point, the incentives actually make the SUV a better bargain than the economy car. After all, if you can cut $200 off of your monthly car payment due to incentives, then paying an extra $180 a month on gas isn’t a sacrifice. The converse is also true: If cutting $200 from your monthly gas bill costs you $250 extra in payments, then you aren’t saving any money at all.
people with money, ie: boomers who have their house paid off, have a nice amount in the IRA/401k/RRSP, etc… will continue to buy LARGE in-efficient vehicles…
doesn’t matter if it’s a suburban, tahoe, explorer, hummer, excursion, f150, f250, sierra, silverado, tundra, armada, LX450, LS600, S600, S550, 7 series, 5 series, A8, A6, 335, G8, charger, mustang gt, AMG XXX, G-wagon, Cayan (sp), toureg, CX-9, CX-7, flex, pilot, or those awful quadruplets (cuv) from GM, etc…
cross-over utility is no better than an suv.
as others pointed out, from a practical standpoint, there’s no difference between an suv and a cuv…
from a practical stand point, if you don’t carry more than 4 adult sized people regularly (or tow, etc…), there’s no need to have anything more than a 4-cylinder sedan (or ‘tall wagon’ like a CRV or rav-4 – for older folks who have trouble getting into a sedan)…
so, if we’re giving SUV hate, as others pointed out, we can give out 335 hate too (impractical compared to the 328…)…
the big, inefficient vehicle will continue…
Over here in $8/gallon Germany, SUV sales are healthy. More to the point, resale values in the SUV class are sky-high.
I think there are two reasons for this. Firstly, if you are a businessman, you can offset your gas expenses against tax — so essentially, the government is subsidizing your use of the SUV. (I am working on an editorial titled “The Truth About How Germany Subsidizes Luxury Cars and SUVs”).
Secondly, the boomer/yuppie philosophy of hedonism is alive and well. Along the lines of “If it feels good and I can do it, then I will”. It will take a few years of hardship before the Categorical Imperative has a chance with those folks.
Martin Schwoerer, What’s the average annual mileage driven for a private automobile in Europe? Significantly less than in the US?
We are talking about arguably the most selfish generation of humans in history; a group that has already stolen $9 Trillion from their own grandchildren. At $8/gal I expect to see free gas vouchers sent out in the mail.
Kix, thanks for asking. I don’t know about the U.S., but the average for private autos in Germany is about 15k KMs. However, the privately-owned car is not ubiquitous in Europe as company cars and cars for the self-employed are much more common than in the U.S.
I see gas stations around here that charge > $4/gallon. I don’t see any shortage of SUV’s (evanston IL). But then again most of the houses in a bad market are barely falling under $1M.
“kps :
April 25th, 2008 at 3:43 pm
George, it’s only $4.50 US. You’ve got to remember that the US have their own undersized version of gallons.”
The highly ironic thing about the US Gallon is that it is actually the OLD British Gallon, which changed for the entire British Empire some time after 1776. I don’t know the actual date.
But of course, even Canada and Britain now use metrics (except the UK still drives in MPH, but petrol and diesel are sold in litres!)
SUV’s are still going to be out there no matter how much the price is…..
$10 a gallon but there will always be a market for SUV’s.
At $10 a gallon only the wealthy would be able to maintain SUV’s. This, preventing “average income” customers from purchasing SUV’s. Morphing the SUV market into only luxury segment.
Spur growth and innovation in the CUV market.
Of course, this will kill the domestic profit margins.
ith, I’m not “hating” on SUVs and trucks, it’s just that when you’ve been around the planet as long as I have (just over 1/2 century now), and you see the average 1974 car from driver’s ed (just after the first energy crisis) get 12 miles per gallon, and then watch you favorite industry gut itself in an effort to get 27.5 mpg, then sink right back into 12 mpg again by intentionally popularizing and marketing these dinosaurs, it’s kind of frustrating.
Besides which, I live in the north, where people have this delusional behavior based on the totally erroneous belief that SUVs with all wheel drive will save their @sses in the snow. The truth is that – sometimes – they are more useful in crummy conditions, HOWEVER, I can’t count as high as how many SUVs I’ve seen @ss-over-teakettle in the ditch on their sides or roof, over the decades. You see, just because your all wheel drive can get you GOING, doesn’t improve your chances of stopping and the high center of gravity actually makes it more difficult to steer or make emergency maneuvers.
Contrast that to Canadians, who used to pay about double for their fuel compared to Americans, and now “only” pay about 40% more (due to the US dollar plummeting – but that’s another subject). Canadians’ favorite car is the Honda Civic. Needless to say, most Canadian locations other than the pacific northwest have significantly worse winters than even northwestern Michigan, where I live.
Therefore, I look at SUVs as wasteful, foolish, posiermobiles, mostly for men who apparently have to compensate for small apendages.
Whereas high performance AUTOMOBILES can be made to have high performance by being light weight; it’s just that car manufacturers have gotten lazy and have let every line of vehicle grow and add mass, which makes high performance dull – so they add a bigger engine, necessitating more heavy duty components, which add mass, and so it goes.
Wasn’t it Colin Chapman who said “add simplicity and lightness”.