Sunday, October 26, 2008

Lower cost of gas = less small car demand?

My Yaris -n Subcompact Culture
Gas is down to levels not seen in over a year. The national average is now $2.65 a gallon--this is all good on the pocketbook.

Now that gas has come down quite a bit, I suppose it's possible that the small-car boom might plateau or even fall. Then again, with less money flowing around in people's pocket books, small, fuel-efficient might make more sense.

However, we saw this happen in the 1970s and 1980s, too. Smaller, fuel-friendly cars started appearing in droves due to the gas crisis. Eventually, people started buying the big vehicles again, and not worrying about fuel economy nearly as much, making small car options very narrow.

Could it happen again, or are subcompacts here to stay?

5 comments:

nlpnt said...
This comment has been removed by the author.
Thirty-Nine said...

I tend to agree with you, nlpnt. I think the credit crunch and upcoming crops of good subcompact options will probably keep them popular for a while. I'm really looking forward to the Ford Fiesta and (apparently) the Suzuki Swift returning to the U.S.

nlpnt said...

(Re-edit of above)

At this point, people are still waiting for the other shoe to drop - CNN the other day was saying that OPEC is planning to cut production in mid-November (i.e. after the election and just in time to impact Christmas travel).

Factor in the still-existing glut of unsold '08 gas guzzlers and the credit crunch in the near term that's making it hard for people to get any kind of car loan.
By the time that eases up, the many tasty subcompacts on the way in 2010-12 will be arriving, while the big'uns get fewer options and a couple new colors at most, and the outlook is good for at least the next design cycle or two. Beyond that is anyone's guess.

Michael said...

There will be less demand while gas prices remain low, but still strong demand for the reasons others have given. Unless the economy picks up AND fuel prices remain low for a year or more. Not looking likely at the moment.

D2M said...

Bah, every where but where I live is getting lower gas prices. I'm still paying 4.06$ per gallon. *cries*

I have to agree with nlpnt too. Gas may get cheaper, but cars won't. People aren't gonna be able to afford the big cars as much, so I think there will still be demand.

I hope there will be. I'd like small efficient cars to continue making their way to the US.