Every cloud has a silver lining, they say. And the silver lining of Hurricane Katrina’s clouds could not be shinier for those of us who love cars and driving. This may be the beginning of the end for the SUV.
Sport utility vehicle sales already were slumping in August thanks to rising gasoline prices. The upward spiral caused by Katrina pushed the price of gas above the $3-a-gallon mark, a point at which the auto market may change for good, according to industry analysts.
Rebecca Lindland, an analyst with Global Insights in Massachusetts, says the $3 mark is the point at which buyers make “that shift from want to need.”
“Right now, consumers may want a big, giant SUV, but do they need it?” asked Lindland. “No.”
Almost all of them could get by with a smaller vehicle, said Lindland – and that is the section of the automotive market that is expected to do well if gas prices stay high.
I decided to check this out in person. I jumped in my sports car and put the top down to enjoy the wonderful weather we’ve been having. As usual, I quickly found myself immersed in a stream of huge SUVs, pickups and other generally repulsive vehicles that satisfy what the great H.L. Mencken memorably termed “the libido for the ugly.” Americans, said Mencken, are afflicted with “the love of ugliness for its own sake, the lust to make the world intolerable.”
Not all Americans. Just us baby boomers. That, at least, was Lindland’s thesis. “If you look at baby boomers and their values when they buy cars, they have to have an aggressive look,” she told me. “The whole way they were raised was comparisons. They can’t help it.”
Traffic was backed up at the first major intersection. In the middle of the road was a big Chevrolet SUV. It was on its roof, which had partially collapsed. One wheel still was spinning, and the driver, who appeared to be a classic baby boomer, was sitting on the curb being attended to by passers-by.
Miraculously, the driver appeared not to have suffered any serious injury. Another SUV was nearby, with just a few dents. Thanks to the propensity of SUVs to roll over, a minor fender-bender almost had claimed a life.
Why do SUVs roll over? They’re designed that way. The government wants to protect Americans – not American drivers. It’s American car manufacturers and union workers the government wants to protect. Both groups lobbied Congress to preserve the so-called “light-truck loophole” that permits domestic manufacturers to skirt fuel economy rules by pretending that SUVs aren’t passenger vehicles.
That little scam had been working great until Katrina came along. As I drove away from the crash site, I passed a gasoline station where regular gas was selling for $3.50 a gallon. Bad news for drivers but good news for the local Honda dealer. Salesman Jim Kavanagh said the dealership is on track for its best month ever.
“Just in the last week, people have been trading in these huge pickups and going into Honda Civics,” Kavanagh told me.
I didn’t see any used trucks on the lot. I asked him about trade-ins. The big trucks and SUVs go straight to wholesalers, he said.
“The wholesalers are paying 50 cents on the dollar” for gas guzzlers, he said.
Meanwhile, the first question out of a typical customer’s mouth is about fuel economy, which is a Honda specialty.
“People never used to ask: ‘What’s the gas mileage?’ ” he said. “But I must have answered that question 50 times in the last month.”
Farther up the road, I came to a Hummer dealer. The salesman told me Hummers and Cadillac Escalades are selling just fine despite the $100-plus cost of filling their tanks. But industry analysts say otherwise. “Fuel Costs Raise Doubts for GM SUVs” read a headline on an article in Automotive News. The article detailed the economic disaster that awaits domestic automakers if gas prices stay high.
They’ve got no one to blame but themselves. If the Big Three spent their money buying technology in Detroit instead of buying influence in Washington, they wouldn’t have to rig the markets in favor of their obsolete hulks. You can fool the free market for only so long.
The inside-the-Beltway types still haven’t learned that lesson. They’re trying to figure out a way to rig the market to bring gas prices down.
One really stupid idea, popular among Democrats, is imposing artificial caps on gasoline prices. That would lead to long lines at the pump. And it would discourage conservation.
An equally stupid idea, popular among Republicans, is suspending the federal gasoline tax. The vote to do so no doubt would come right after the vote to spend another $50 billion or so on hurricane relief. Republicans used to believe in balancing the budget – until they took power.
Simply letting the law of supply and demand work its magic is not a popular approach with each party. There’s only one thing that will roll over faster than an SUV – and that’s a congressman.
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