Thursday, August 5, 2010

Small cars and short memories: American consumers return to large vehicles in July

I'm not trying to pick on Nissan, but here's something interesting: In July, 2010, sales of the very large Nissan Armada SUV above were up 311.4%. Sales of the Xterra SUV were up 56.6%. On the flip side, sales of the subcompact Nissan Cube were down 54%. Sales of the equally subcompact Nissan Versa were down 9.4%. This isn't meant to bash SUVs—I'm not an SUV hater—it's meant to show that in July, 2010, sales of large vehicles were up, and sales of small cars were down, and not just at Nissan.

It's been said Americans have short memories. This could certainly be said for car buying trends, at least with regards to vehicle size and fuel efficacy. Gas prices have held relatively steady over the last year—the average price is still under $3.00 a gallon, although on the rise—and Americans have decided to buy larger, thirstier cars again. At least that's what July's sales data suggest.

July was a good month for the majority of automakers offering vehicles in the States. However, it was the bigger vehicles leading the charge, even though there's more small cars on the market than in recent history. Autoblog, for example, reported Honda's Civic was down 25.5% while the Pilot was up 45.4% (the Fit was down 29.5%). Nissan's car division was down 3.7%, but its trucks went up 51%. As I reported on Tuesday, all b-segment cars on the U.S. market (sans the Kia Rio and Kia Soul; +99.7% and +65.9%, respectively) experienced a drop in sales compared to this time in 2009.

It's not like Americans don't have small options these days, it's quite the contrary. There are more small car choices these days than since the 1980s, and they're almost undoubtedly the best small cars ever to grace American soil. Even with the not-so-stellar economy, gas prices that still aren't "cheap," and many great smaller options, the slow sales of small cars says something about U.S. consumers: They like big vehicles and fuel economy isn't as important as many want to think.

How soon people forget. Remember when gas prices approached $5.00 a gallon in places? It wasn't very long ago. Remember saving money by driving a car that got 25 MPG vs. 15? Of course a subcompact, compact, or even a "car" doesn't fit everyone's bill. But, they likely fit more lifestyles then many people would want to believe. It's the "bigger is better" mentality.

Hey, I'm the last person on Earth that's going to tell someone what they have to buy. Some people need pickups, SUVs, and minivans (most "minivans" aren't very "mini" anymore if you haven't noticed), and you do have the freedom to buy whatever the hell you want—that's fine. But I'd bet gas prices will rise again and used car lots will once again be strewn with copious amounts of large, gas-guzzling vehicles. I just figure it's a matter of if not when.

Clearly, Americans decided to buy big with their vehicle purchases—at least in July—despite the influx of great small vehicles. But is this spike in bigger vehicle sales simply a blip on the radar, or is this a return to buying bigger and less fuel-efficient again? Assuming gas prices stay around where they are, the next few months should be good indicators.

- Andy Lilienthal


Anonymous said...

A lot of these big gas guzzlers are very unnecessary. It's puzzling to drive through a parking lot and seem some 5 foot tall female jumping down from some huge "mount everest" with wheels. It's no wonder we always get the short end of the stick when it comes to small cars. I'm amazed to see the variety of small cars Asia, Europe, and other parts of the world get. I also think the obesity epidemic over here plays a part as well. Pretty lame if you ask me.

Unknown said...

Whether or not the percentages are up there's also a couple things to look at. The numbers for the larger vehicles are still low and it's good to see that people are willing to spend money again.

Andy Lilienthal said...

I agree, Craig. At least they're selling something!

D2M said...

I'm not sure, but I'll guess! Cause that's fun. :3

I doubt they think they're getting gas guzzlers. Most of the SUVs out now get better gas mileage than the same model years ago. They're probably being told how GOOD the gas mileage on those new SUVs are now.

Also, SUVs are just large hatchbacks. They are more practical for every day use than, say, a sedan. They look more rugged than sedans too. Maybe people keep coming to them for those reasons?

And keep in mind most Americans are families with kids. Subcompact and compact cars generally do not mix well with children. (Unless you have only 1 child. In which case it might work.)

I know most SUVs now use car engines, or have chassis that are based on cars.

What I'm curious to know is would a mid-size SUV sell? One that gets the same gas mileage as mid-sized sedans, but has the rugged looks and interior practicality of an SUV?

Would people buy it? I think they might.

I know I would. Because I'd like something bigger than a compact, but not giant full sized SUV or sedan. But every in the mid-sized range is a sedan, which is useless for me.

Anonymous said...

A lot of people who buy large vehicles do so as a personal choice rather than those who buy a large vehicle out of necessity. It is always easy to spot the difference between the two groups of large car buyers when gasoline spikes in cost as the personal choice group runs away from their suv's to fuel efficient cars!