Forbes' columnist Jerry Flint says rising U.S. gas prices are not changing– nor are they about to change– America's car-buying habits. "We can afford it. If we rushed out and sold our big, safe, comfortable cars and trucks, trading them for little minis, we would be driving uncomfortably and less safely. We would lose more money on the trade-ins than we would ever save in lower gasoline bills." Uh, what about sagging pickup trucks sales, or the switch from SUVs to crossovers? Don't the numbers reflect a new mpg-related car-buying paradigm? Flint dismisses the shift as nothing more than a continuation of a pre-existing trend– although the dean of automotive journalists fails to state what triggered these trends in the first place. As always, Flint's take on the hard numbers is let-the-chips-fall-where-they-may PC anti-matter. Until the last 'graph. "But all is not hopeless," Flint opines, suddenly revealing his disapproval for American consumers' recalcitrance re: downsizing their cars, carpooling or hopping onto public transportation. "Auto companies around the world, those in Detroit included, are developing improved engines that will push a car farther on a gallon. They will be here in a few years. And they'll fit under the hood of a roomy, comfortable American car." Well thank God for that!
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Maybe gas prices aren’t changing the driving habits of a wealthy Forbes magazine columnist and his friends at the country club, but they certainly have changed the habits of everyone I know.
… trading them for little minis, we would be driving uncomfortably and less safely. We would lose more money on the trade-ins than we would ever save in lower gasoline bills.
Er, what? Assuming he’s talking BMW-owned MINI and not generalizing the term to mean “smaller than a Crown Vic”, the MINI is both safer in crash tests and retains its resale value better than most cars, let alone our big comfy (gas guzzling and “please don’t let me die”) trucks. According to Cars.com, the MINI Cooper (non-S) has the best anticipated resale value. Also in the top 10 are the Impreza WRX STi, New Beetle, and Rabbit. At the bottom? Ford truck, Ford crossover, Buick crossover, Dodge minivan, Ford big-ass comfy car, Chevy truck, Dodge truck, Dodge truck. I don’t have time to look up the crash tests, but I bet the spread is similar.
Not to mention that many small cars are now safe and comfortable.
I recently borrowed my dad-in-law’s loaded G35. Great ride, no doubt, but for the 30 miles I commute everyday, there is no practical difference with my golf. Neither sharper handling, more power, leather, or GPS system made any practical difference from the Golf I usually drive.
If I had to drive 4 hours a day or went to the track, it’d be a different story, but as far as your regular commuting goes, small does it.
Dinosauric dissent from an out of touch, out to lunch, former “expert”.
He obviously didn’t discuss this opinion with his son.
AKM :
I recently borrowed my dad-in-law’s loaded G35. Great ride, no doubt, but for the 30 miles I commute everyday, there is no practical difference with my golf.
Except the G will get you there every day.
“Except the G will get you there every day.”
Ah, so true, LOL!
When it comes to safety, larger and heavier still wins in the real world, all else being equal. This is the oldest truism in auto safety, known since the late 60s.
Still, I personally don’t drive around in a hulk like the Hummer H2 or even a Ford Crown Vic, the latter of which didn’t do very well at all in the IIHS side impact tests, even with optional side airbags. So “all else being equal” is not a given.
My compromise: midsize cars with good crash scores and side airbags — 2 Toyota Camrys in my case. Also I have a ’98 Nissan Frontier with not-so-good crash scores but reasonable weight (just over 3000 lbs) and a 4-cylinder for good fuel economy. And I’d rather be in the Frontier than a Mini if the 2 collided head-on.
I don’t doubt that most Americans aren’t altering their driving habits — for now — because they can’t. They can’t unload their monster SUVs since many people are upside down on their loans. They can’t drive less because no one will buy their McMansions out in the x-burbs. They can’t buy a new fuel efficient car because they’ve maxed out their credit.
As much as I respect my elders (I’m almost there myself….), I stopped reading Flint a few years back when sharper commentary became available (TTAC, Autoextremist, etc). Not only are y’all more in-depth (and on-topic, and current…), but I don’t have to content with 30% words and 70% flashing ads.
Yes, Jerry, nearly everyone I know (except my oblivious drive-happy spouse) has changed their driving patterns and habits.
There are so many invalid assumptions re. the price of gas and its consequences that it’s hard to know where to start. What probably confuses the most is the kind of exceptionalism that a writer for Forbes introduces into the equation here. His readership consists of people who are pretty effing far removed from Minimum Wage Scales.
Before this weekend’s new price hike, the price of a barrel of oil had risen 56% compared to this time last year. We’re going to cross into USD 100+ soon.
Seriously, it’s dawning on people that there’s less oil than we’ve been hoping for, and that we should be using it for something other than pushing supersized cars to-and-fro Walmart’s parking lot. As that realization grows, you’ll see the prize of oil rocket boosted.
James Kunstler, who I think waxes way too pessimistic on the topic, reported dire news from the recent ASPO summit in Houston. Still, he’s completely convinced that the US suburb to burb lifestyle is in line for a systemic shock of cataclysmic proportions. If we dial Kunstler back on the Richter scale we’re still dealing with a major reality check that clearly does not factor into Jerry Flint’s distorted analysis.
This guy isn’t out of touch with reality; just most people wouldn’t agree. My favorite car was a 1983 Cadillac Coupe Deville, which I bought when I was 23 and kept it four years. I’m almost 30 now and want another! It was lighter than most mid to full-size cars on the road today at 3,800lbs, and I felt PLENTY safe in that 19 foot car. Easily had the most comfortable seats and smoothest ride of any car I’ve driven/ridden in. Gas guzzler right? Wrong, the infamous 4.1 V8 worked fine and gave me around 20mpg. That engine packed a whopping 125HP, so a modern small V6 should be able to hit upper 20’s MPG in the same application. “Big” does not have to equal “gas guzzler.”
Gas is not too expensive because every year they sell more of it and the price continues to rise. People have no problem paying 4 grand for a TV, 100 a month for a cell phone, 150 a month for internet/cable/phone service, 3 grand a month for housing, and over 20K for an average car. Another 40 bucks a month for fuel is not going to bankrupt anyone.
OPEC and the rest of the oil producing nations (of which the US used to be a big part of) turn their natural resources into dollars, or other temporarily negotiable notes. When the straws start to suck air we will still have America the Beautiful right here at home, leaving the rest of the world jealous again.
While gasoline prices are having an effect on sales, an even bigger problem looms in the popping of the housing bubble. And that one is just starting to play out on a nationwide scale.
The price of gasoline, when adjusted for inflation, only recently hit its March 1981 high (and then retreated).
And I recall reading that when gasoline purchases are considered as a percentage of household income, gasoline, even at today’s prices, takes less bite out of our budgets than it did in 1962.
Flint misses the collapse of the housing market, which is having a bigger effect on new vehicle sales than gasoline prices. Price a typical pickup or larger SUV these days – it’s an exercise in sticker shock. The only way most people could afford them was to tap the rising equity in their homes. Now that home prices are either stalled, or in actual retreat, there is less money available to spend on these vehicles.
Note that new vehicle sales have declined the most in those areas that have been hit hardest by the popping of the housing bubble.
SUV sales are suffering from a one-two punch – declining housing prices are eliminating many buyers, while rising gasoline prices make everyone skittish about committing to a new vehicle for 4-5 years that gets less than 18 mpg.
Also note that sales of smaller SUVs (Escape, CR-V, etc.), seem to be holding up better, which suggests an out-migration from the larger SUVs to their more fuel-efficient brethern.
Sales of big and mid-sized SUVs and pickups will retreat to where they were in the 1970s – they will be bought by people who really do use their full capabilities. The crowd that drives them as a fashion statement will slowly decrease as they are in a better position to trade.
Well, as an auctioneer and car dealer I’ve managed to do the following over the last two years…
1) Rideshare with friends in the business at least once to twice a week. This is no longer atypical in my business.
2) Drive more economial vehicles (again not atypical, even in Georgia). For around town driving my wife uses a compact (Corolla) and I use a compact wagon with a 5-speed for commuting.
3) Bought a scooter (Yamaha Riva XC125) and started up a scooter enthusiast group called the Scooterholics. When not exploring Deliverance country, I use it for food shopping and traveling down winding one lane roads in the burbs.
4) Combine rides so I only go out once and get everything done before coming home.
5) If I buy a vehicle on the side while doing a sale that’s near the airport area, I’ll take public transit to get it picked up the next day. The cost is only $1.25 and I simply can answer the phone and read a book during the interim time.
The auctioneering business has always yielded a bit of frugality. When I first got involved in it in the 1990’s, a 30+ year old vet explained to me, “When you have five auctions a week, live like you have three. When you have three auctions a week, live like you have two. It’s the only way to survive the downturns.”
He was dead on. I think the same mentality works for folks who are in the real estate business, construction work, and pretty much any business that experiences the ebbs and flows of a cyclical economy. Flint’s article completely contradicts what I see and hear in metro-Atlanta and although certain pockets of this country would probably support his view, I wonder whether his subscribers have the same perspective.
For those who think bigger is always better:
The big 2.8 would get sounder advice from Larry Flynt.
‘Nuisance’ my ass.
Anyway, if (when?) Iran is bombed change the 3 to a 5 and we’ll see what happens. ‘Buy a Calibre, get a Durango free!’
@geeber
The price of gasoline, when adjusted for inflation, only recently hit its March 1981 high (and then retreated).
And I recall reading that when gasoline purchases are considered as a percentage of household income, gasoline, even at today’s prices, takes less bite out of our budgets than it did in 1962.
Things have changed, though. We’re a lot more reliant on gasoline and truck/auto transport than we were back then – due to the Just-in-Time logistics made possible by computers. It’s not only a question of what regular consumers are willing to pay, but of what getting goods to regular consumers will cost, as a result of rising prices in gasoline. Used to be that the points of manufacture weren’t that far from the points of consumption. That’s changed radically. Food, goods, housing – you name it — all in the throes of JIT logistics, and with costs having to be passed on to consumers, in a market where there haven’t been any real growth in income for a long time …
Interestingly, the housing crisis exactly mirrors the peak oil graph. Probably just a coincidence.
I don’t doubt that most Americans aren’t altering their driving habits — for now — because they can’t. They can’t unload their monster SUVs since many people are upside down on their loans. They can’t drive less because no one will buy their McMansions out in the x-burbs. They can’t buy a new fuel efficient car because they’ve maxed out their credit.
Or, conversely, the gas guzzler is paid for and buying a smaller car with better mileage would cost more overall because it is still cheaper to feed the big beast than make payments on a smaller one. Especially if you’re only option is to finance the small beast out to 4-5 years.
Stein X Leikanger: Food, goods, housing – you name it — all in the throes of JIT logistics, and with costs having to be passed on to consumers, in a market where there haven’t been any real growth in income for a long time …
We’re paying less of our income (on a percentage basis) for food and clothing than we were in 1960.
Those thing that we are paying more for – housing, vehicles – tend to be more expensive because of government regulations (today’s cars are cleaner and safer than their 1960 counterparts, but they are also more complicated, more expensive and harder to fix when something goes wrong), or increasing consumer expectations (compare a brand-new 1960 house to a brand-new 2007 house in terms of square footage, features, etc.).
Businesses have also become much more efficient in their use of energy. One unit of energy goes much farther in increasing production or raising profitability than it did in the 1970s.
An interesting editorial and follow up comments as usual. Jerry Flint is entitled to his opinion just as we all are but I would agree with RF that on this occasion he is wrong.
I do think that skor hits the nail on the head though…. The price of fuel and the reasonable expectation that it will continue to creep up has undoubtedly made an impact already on the choice made by new car buyers – but as skor says, many people would change to a more fuel-efficient vehicle by choice but their circumstances mean that they are unable to do so without taking a financial hit that would negate any possible fuel savings.
I find myself in that category to some extent. Changing vehicle needs in my family meant that I inherited the car that had previously served as the “family size” car – a Toyota Avalon. So I now use that car to commute to work and 99% of the time I am the only occupant. I would be happy swapping to a smaller more economical car for my commuting ( yes, I’m secure in my masculinity and don’t need to drive a monster truck to compensate for anything in particular) but realistically it would not pay for itself. The Avalon is a 1998 with 120K + miles. It is at that stage in its life cycle where it is still a good and perfectly dependable vehicle but is not worth a lot to sell or trade.
To sell this car and replace it with even a used smaller one would barely break even. I note that prices of good quality used small cars like a Honda Civic for example are at a premium at present (which I think might provide further evidence to counter Jerry Flint’s argument that people aren’t reacting to gas prices? ).
So for me – if I could snap my fingers and be magically swapped into a similarly quality yet smaller and more economical car with no financial penalty at all then I would probably do just that – but it doesn’t work that way.
I think that the drift to smaller more economical cars will continue at a steady pace but the speed of the changeover will always be governed by the fact that people have to be in a position where it makes financial sense for them to change.
tiger260 : To be fair, Flint agrees with your "locked in" thesis: "We would lose more money on the trade-ins than we would ever save in lower gasoline bills." But he doesn't agree with the overall supposition that rising gas prices have changed or are changing consumer tastes.
I read Flint but think he speaks mainly for the older generation. Most people will eventually give up their gas hogs when they are forced to by economics. My oldest son has an old F150 that is a real gas guzzler. He will buy a smaller car when the truck dies and it no longer makes sense to repair it. I think this is the case that many people find themselves in. So it will take time but eventually we will end up copying the Europeans and drive much smaller vehicles. We Americans have been spoiled by cheap gas. Reality is finally catching up with us and it is not a pleasant experience. It is always painful having to ‘grow up’.
One of my most consistent complaints about the Detroit 3 has been that they have always offered us a false dichotomy of: Either economy or power. With few exceptions, the small, economical engines offered by the D3 have been absolutely anemic in terms of power. Meanwhile, the Japanese have no problem putting out a 4 cyl engine that puts out nearly as much power as an American V6, and still gets 4 cyl economy.
Japan has been doing this for years. Why hasn’t detroit cracked this nut? It can’t be that hard, can it? Instead, their solution, when confronted with complaints of inadequately powered cars, has always been “okay, let’s figure out a way to stick a bigger [read: thirstier!] engine in there.” No effort made to try and get better MPG out of the existing engine, just put a bigger one in.
It’s frustrating, because it doesn’t have to be that way.
Yet another clearly evident disconnect between the Forbes/country club set and the other 99% of “us” down here in steerage. Small and economical DOES NOT have to equate with cheap and chintzy.