The recent move by Ford to kill off most of its car lineup brought strong rebukes by many automotive experts declaring the plan a colossal mistake. They pointed to rising gas prices as a primary factor in their reasoning which, in their view, should depress pickup sales and drive consumers to more fuel efficient cars. The problem, though, is the data doesn’t back them up.
For years, the conventional wisdom has been people by pickups when fuel prices are low and sell them when prices rise. Now with an expected rise in fuel prices, we are seeing a similar same story play out again how consumers will be impacted and how large vehicle owners, like full-size SUVs, will sell them off and purchase smaller cars instead like from this Associated Press story:
Kevin Lanke, a motion picture lighting technician in Redondo Beach, California, says he’s now paying about $3.39 per gallon to fill up the 25-gallon tank in his 2000 Land Cruiser SUV. That’s about 20 cents more per gallon than a couple of months ago.
“I would fill up my car and it would be $52 or $53,” said Lanke, 51. “Now it’s in the mid $60s for the same amount of gas.”
Lanke keeps the recent increase in perspective, noting that three years ago he and his fellow Californians were paying over $4 per gallon. But he’s already weighing his options, saying if gas goes to $4 a gallon he’ll buy a more fuel-efficient car to use as his main ride and drive the Land Cruiser only when he needs it.
The same story, widely circulated, also quotes an analyst from the Oil Price Information Service declaring this summer as the “most expensive driving season since 2014.”
This commentary would lead one to believe pickup sales are set to plummet since who in their right mind would buy a gas guzzling pickup when they can drive something more fuel efficient? It makes sense, however, the data disputes it.
A quick Google search and an hour later, I put together this chart showing gas prices and U.S. pickup sales every year since 2006.
|Year||Gas Prices Average||Total Pickup Sales||+/- Previous Year|
|2018||$2.74 PROJECTED||768,114 May 2018|
747,097 May 2017
|+2.8% May 2018|
Looking at the data, it is quite clear gas prices don’t affect pickup sales. For example, from 2011-2013, gas prices pushed over $3.50 a gallon and each year pickup sales grew. I’ve heard analysts say this was due to “pent-up demand since post recession.” Ok. Fine. Let’s look at more recent times.
From 2015-2017, the average gas price fluctuated from $2.43 back to $2.42. This seems like another pretty stable period and once again pickup sales soared during this period.
This summer the projection is gas prices will climb once again to $2.74 – the highest since 2014. The conclusion from analysts? Pickup sales will drop once again as consumers trade them off for cars. Once again, the data doesn’t back them up.
Through May, pickup sales are up 2.8% and this is before the big summer selling season push as well as a new 2019 Chevrolet Silverado, 2019 GMC Sierra 1500 and 2019 Ram 1500 pickup with eTorque hybrid engines expected to hit the market. These new pickups should bring in consumers and drive sales even higher.
Wait, what? That’s not supposed to happen! The average price increase of $.32 a gallon should not cause a year over year increase according to the analysts.
The facts are the pickup market is red hot, sedan sales have stagnated and fuel prices don’t have a damn thing to do about it. And don’t tell me this is just a phase with new pickups coming to the market, sales have been climbing for 8 straight years even during times when gas prices climbed above $3.50 a gallon.