Remember when the price of gas at the pump was pushing $4.00/gallon, consumer credit was getting tight and U.S. automakers were universally bashed for failing to retool and abandon their historical truck and SUV cash cows sooner? That was 2008. Now, as pump prices hover around $3.00/gallon -- and the deficit reduction plan to include a 15% fuel tax gains momentum -- auto sales rose 17% in November on strong SUV and light truck sales, according to today's WSJ. How did we get here?
Bloomburg Businessweek reports "Ford's sales increase was driven by gains from its redesigned Edge sport-utility vehicle, a 26 percent jump in F- series pickup deliveries and strong demand for small cars such as the Focus and Fiesta ... [and] Chrysler's gains were driven by the redesigned Jeep Grand Cherokee, sales of which more than tripled from last November to 10,984. Ram pickup sales rose 86 percent to 18,206 last month." And lest we forget that GM's moniker "Government Motors" never quite caught on, "Buick sales climbed 36 percent to 11,725 vehicles, led by deliveries of the Enclave SUV... [and] GMC sales gained 30 percent to 27,590."
While "sales industrywide have risen about 6% so far this year [and] truck sales have climbed about 17%", prior to the recession "vehicle sales exceeded 16 million annually" and the current figures only lift "the seasonally adjusted annualized sales pace to 12.26 million vehicles." But that hasn't stopped industry executives from sounding like they've hit the punch bowl a bit early. The Journal article contains quotes like "a good number of people were out shopping over black Friday so we're fairly optimistic about car sales later in December" and "We believe we will see meaningful job creation in the coming months" – neither of which have any factual or statistical basis. Then there's my ironic favorite: "In a sign of the car industry's rebound, GM and Chrysler both said Tuesday they would hire 1,000 engineers each to work on fuel-efficient vehicles."
Perhaps American's just like big vehicles. Or maybe consumers are as irrational about car buying as the auto execs are on the economy. But so long as sales continue to increase, I guess vehicle size doesn't really matter. As Dickens' tiny Tim said "God bless us, every one!"