The last time we saw a wholesale shift in automotive preferences on this scale was during the Arab oil embargo of 1973. That was driven not so much by gasoline price increases but by scarcity; stations ran out of gas, and buyers sometimes had to wait in long lines to purchase gasoline. That kind of scarcity breeds fear, and fear is a powerful market factor. What we're seeing today is different. Gas is not in short supply; it's just expensive. Economists, environmentalists, and auto executives have long wondered what it would take to pry Americans out of the big, comfortable cars, trucks, and SUVs they appeared to love so much. Now they have their answer. Four dollars a gallon is proving to be the magic number.
In a speech in June, General Motors CEO Rick Wagoner acknowledged the new reality, announcing deep production cuts among the company's trucks and SUVs, funding approval for the Chevrolet Volt plug-in electric car, and a possible sale of the Hummer division. "These higher gasoline prices are changing consumer behavior, and rapidly," said Wagoner. "We at GM don't think this is a spike or temporary shift; we believe that it is, by and large, permanent." The tipping point has been reached.
America's Top 10 Selling Vehicles
|January-April 2008||May 2008 (percent change vs. May 2007)|