Not Dead Yet? Falling Gas Prices Revive Interest in Trucks

Last Updated Aug 11, 2008 8:37 PM EDT

Will Old-Time Gas Prices Revive the Truck Market?Keep it handy, but hold off for now on that last nail in the coffin for pickups and SUVs.

Maybe the psychological barrier for $4-per-gallon gas works both ways, according to Edmunds.com.

Since gas prices have moderated below an average of $4 per gallon, truck owners suddenly are less likely than they were, to consider other product segments, like cars, crossovers and hybrids, according to the auto shopping and research web site.

When gas prices passed $4 earlier this year, consumers just as suddenly put gas mileage much higher on their list of reasons to purchase a car. Truck sales, which were already going downhill, really plunged.

With each passing month, the multi-billion-dollar question became, "Is this change in consumer attitudes permanent?" The U.S. auto industry answered with a big "Yes." The reaction has been profound.

Some measures are easily reversed, such as cutting back on the number of factory shifts dedicated to building trucks. But some changes are going to be harder and more expensive to reverse, if that's what the automakers ultimately decide to do.

Ford and GM, for instance, announced that they would close or re-purpose factories that are now building trucks. Chrysler, Toyota, Nissan and Honda also announced cutbacks in trucks.

In some ways, as traumatic as it is, those are actions the Detroit 3 needed to take anyway. That's because they can already build way more vehicles than they can sell, and because the U.S. government is hiking gas mileage requirements.

Either way, the Detroit 3 urgently needed to cut back on the factories that build trucks. Even if truck demand were to rebound somewhat, at this point it would be with mixed emotions that the car companies would go back to the UAW and say, "Never mind."

So regardless whether the change in consumer attitudes is quote-unquote "permanent," I would expect the Detroit 3 to stick with the changes they've announced, including the cutbacks in truck factories,

Unless gas prices go back to pre-2004 levels and stay there, there's no risk that truck demand would outstrip supply.

Retro gas pump via Flickr user Alesist, CC 2.0
  • Jim Henry

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