A decade ago, most people had written off SUVs as a driver of sales in the U.S. auto market. Gas prices were sky-high, making larger, less fuel-efficient vehicles a turn-off for value conscious buyers. All of the major automakers had shifted their emphasis from SUVs to smaller sedans.
Today, SUVs lead sales in the U.S. auto market, while sales of cars are in decline. Car dealerships in Bloomington and around the country are now racing to meet consumers’ demand for SUVs and decreasing their footprint in the small vehicle market.
Consumers purchased a record number of new automobiles in 2016, and SUV sales accounted for 63 percent of total sales, up from 50 percent just three years prior. That’s an amazing turnaround in the past decade, as SUV sales cratered in 2008 at the onset of the Great Recession.
There are a number of reasons for the revival of SUV sales in the U.S., including:
- History repeats itself – Americans love big vehicles and only turn to smaller, more fuel-efficient vehicles when they have to. We’ve seen this pattern repeat itself several times in automotive history. The U.S. auto market’s re-embrace of large SUVs is just a return to type for the American consumer after years of forced frugality.
- Increased fuel efficiency – High gas prices were killing SUV sales in the late 00s. Auto executives hated this because they typically make more on an SUV sale than a car sale. Automakers diligently researched ways to make SUVs more fuel efficient, using lighter components to trim weight and more computerized engine management systems to reduce fuel consumption. The end result is a fleet of SUVs that is more fuel efficient than ever before. Many of today’s SUVs, particularly crossovers, are just as fuel efficient or slightly less fuel efficient than sedans.
- Lower gas prices – After hitting highs in the mid-00s, gas prices have dropped significantly and remain low. The development of domestic shale oil production has helped to break the stranglehold over oil prices once enjoyed by OPEC nations, giving the U.S. leverage in keeping oil prices low. The drop in gas prices has convinced even the wariest of consumers that SUVs are a good bargain again.
- Low interest rates – Although interest rates are beginning to climb again, they remain at historic lows. This means that new car buyers can still take advantage of low interest rates to enjoy low payments on a new vehicle. Low interest rates have helped to spur more new car buying in recent years.
- Incentive financing – Automakers have been generous with incentives for SUVs and other vehicles in recent years. On average, automakers were giving away about $4,000 per vehicle in incentives for automobiles in 2016. Manufacturers have tightened up on these deals a little, but values are still out there for smart shoppers.
Automobile consumers in Indiana looking for a great deal on new or used cars in Bloomington should check out Community Cars. A well-established car dealership, Community Cars has a wide range of new and pre-owned vehicles, including top-selling SUVs. Stop by today for a test drive or to talk with one of the dealership’s sales reps.