Projo Cars Blog

For the auto industry, 2008 will be a year to forget.

I mean, how can any industry deal with the kind of lurching fundamentals that we have seen this year in the rise and fall of gas prices.

Along with oil prices, they soared through the first half of the year, topping out well above $4 a gallon in early July. Then they fell off, tumbling to below $3 a gallon.
How do you plan with that kind of moving target?

Especially if you are an industry with enormous development costs, long lead-in times and you are producing a product that is subject to the whims of fashion.

The drive-up in gas prices earlier this year prompted auto makers to hammer in the final nails in the SUV's coffin. R.I.P.

Not.

Throughout the 1990s and well into this century, the Detroit automakers rode the profitable SUV gravy train despite the increasing evidence that the big engines were needlessly belching out climate changing emissions.

But it was a gravy train fully supported by the American consumer. As a recent story in The New York Times makes clear, General Motors could not make enough SUVs nor could it make them too big.

We all wallowed in the trough.

Now gas prices are coming down, will we return to the SUVs?

I doubt it. In these uncertain economic times, most people are hardly in the mood to buy any car let alone an SUV.

And while those high gas prices prompted us all to adjust our budgets, the falloff is giving us all a bit of a break. And anyone who got out of their gas guzzling SUV is surely saving even more money than they originally planned on.

Hard to imagine they will be ready to jump back into an SUV even if they are selling at bargain rates.

- Peter C.T. Elsworth

 Tags  auto industry Commentary fuel prices SUV

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