Falling gas prices up SUV sales
http://abclocal.go.com/wabc/story?section=resources/traffic&id=7038986#bodyText
|Summary|
As gas prices are falling, more Americans are going back to buy bigger vehicles which are not new fuel-efficient hybrid rather, gas-guzzling SUV and trucks. As stated in the article, with the price of gasoline dropping, dealers report sales of SUVS and trucks are up at least 9 percent, according to one national study. The Cash for Clinkers program aimed at spurring sales of fuel-efficient cars while getting older models off the road had recently ended. Motorists say there’ll always be a market for sport utility vehicles. Dealers say expect more so-called crossover vehicles, which could help soften the blow if gas prices start to go back up.
|Connection|
Under most circumstances, consumers will buy more of a product if the price is low and less of it if the price is high. If the price of a product increases, less of the product can be purchased with the current level of income. In this article, the falling gas prices can relate to the interaction of the law of demand and the factors that affect the quantity demanded. Clearly, this article talks about gas prices dropping which caused more American’s to going back to buying gas-guzzling SUVS and trucks. This is to my knowledge the factor price that is affecting the demand, SUVS and trucks where price decreases in gasoline increases the quantity demanded for bigger vehicles.
|Reflection|
The fact that dealers report sales of SUVS and trucks are up at least 9 percent is remarkable in my opinion. It is difficult to predict the long-term effects of high gas prices as an average consumer so deciding on buying a bigger gas-guzzling vehicle in parallel to the decrease of gasoline price is not a bad choice. The market changes as it often does. Buying a SUV or a truck is not necessary affected by gas prices but for big family purposes or participating in outdoor activities that includes hauling loads or pulling a boat. Furthermore, when the gas prices remained at a higher price there is no doubt that the sales of bigger vehicles were lower however with the prices falling in gasoline, it would be apparent that the demand for bigger vehicles would increase. As a result, the sales of SUVS and trucks would increase.
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ReplyDeleteIt is good to hear that gas prices are starting to fall in the States, but how about in Canada? We are still suffering from high gas prices even though in the past few weeks prices have fallen to just under a dollar per liter. I agree that car buyers will take into consideration bigger SUV’s and trucks when making their decisions but I think there is more to it than just lower gas prices and function ability. Automakers are staring to feel the pressure of environmental expectations as more companies are going green with their vehicles. GM is already producing hybrid versions of their popular SUV’s one being the Cadillac Escalade hybrid. Whether gas prices continue to fluctuate or not, consumers will be turning their heads towards more efficient and environmentally friendly vehicles in the future which will in turn increase the demand of hybrid vehicles.
ReplyDelete- Aaron W.
Kenny, I agree with you that when the gas prices decrease, the demand for SUVS increases. Since gasoline and vehicles are complementary products, this makes it one of the factors affecting the demand. Consumers will buy more of a product if the price is low and less of a product if the price is high, but this is not the case for gasoline. The demand of gasoline is inelastic therefore consumers would constantly be buying gas regardless of the price. In my opinion, this is the case because we are dependent on our cars to take us to places that are out of reach by walking.
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