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Gas prices driving demand: Manufacturers respond with small 'luxury' cars
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We really should have seen it coming. A national revolt against high gas prices that resulted in flat sales (or worse) for pricey and low-mpg SUVs and trucks has sent automakers back to the drawing board.
They are coming up with more economical vehicles, smaller ones that get better gas mileage and presumably will be better for the environment. But don’t think the smaller cars will come with smaller price tags. Quite the contrary.
In an attempt to appeal to the drivers who don’t want to give up leather seats and DVD players for the little ones, the Big Three’s latest offerings, along with those of other carmakers, will have all the bells and whistles, but in a smaller package.
According to a report in USA Today, it’s not to decrease our dependence on foreign oil or because it’s good for the environment or any of those flimsy reasons. It’s all to recover the lost profits when the big-vehicle boom went bust.
Who could blame the auto manufacturers wanting to recoup some of those lost dollars? Business is, after all, about making profits, not posting losses. And nothing would please us more to see the economy get a boost with all the automotive employees who were sent to the unemployment line called back to work.
But everything comes at a cost. And the cost will be status quo: to the consumer.
What is a bit funny, if you can see through the tears you will shed next year if you wish to drive a gas-sipper off the lot after trading in your behemoth, is that the so-called luxury vehicles of yore will now be priced for the first-time buyer. Their popularity and status will be lost and they will be affordable again for ordinary consumers. The people who previously wanted Hummers now want the status of being able to afford a smaller car, one less expensive to operate. Ergo, those same folks who at one time would have been aghast at the idea of buying a mid-level car will be lining up for them — and paying luxury car prices.
So let’s see if we have it straight: Higher gas prices are driving up the demand for smaller cars that get better mileage. The less-popular larger vehicles will be affordable for middle America and the smaller, even compact, cars will be the darling of the more monied set.
Take that, all those who laughed at the Pacers, the Pintos and the VW Beetle of 1968.
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