American’s shun hybrids in favour of gaz-guzzlers as fuel prices slide

America is a funny place. Or perhaps it’s the rest of the world that gets a distorted image of the United States thanks to the media, 90% of whose stories seemingly cover 0.001% of the country’s population.

Excuse my convoluted maths; but the point is that we (the rest of the world) hear a lot about American’s going green, but as the news story below shows, it’s not a mind-set of the American people. The average Joe still yearns for a gas-guzzler to get from A to B.

Perhaps I focus too much on the Hollywood press, where everyone is portrayed to be driving about in a Prius, hugging polar bears and bunnies? MD

gaz guzzlerBy Ben Klayman and Bernie Woodall

DETROIT Nov 12 (Reuters) – It is the automotive equivalent of Pavlov’s bell: when gasoline is expensive, U.S. car owners try to downsize, but once pump prices ring down, they salivate over big pickup trucks and SUVs.

With gas prices dipping below $3 a gallon last month for the first time since December 2010, size is back in vogue.

“The migration to trucks will turn into a stampede if these gas prices go lower or stay low,” Mike Jackson, chief executive of AutoNation Inc, leading U.S. auto retailer, told Reuters.

“Americans just love big.”

Helping fuel the upswing is an improving economy and better fuel efficiency that allows people to go for size and feel less guilty about it.

“A new Ford Escape (crossover SUV) is more fuel efficient than a 10-year-old Camry,” says Barclays auto analyst Brian Johnson. “The days of having to be ashamed of your Yukon seem to be fading,” he said, referring to General Motors’ full-sized SUV powered by a V8 engine.

Analysts and industry executives say SUV and truck sales have been rising already before fuel prices fell and cheaper gas could sustain the trend into 2015.

In October, for instance, SUVs and trucks accounted for 72 percent of Ford’s sales, up from 68.5 percent a year ago, while Chrysler’s sales surged 22 percent thanks to strong demand for its Ram pickups and Jeep SUVs.

With a greater share of big vehicles in their line-up than their European, Japanese and Korean rivals, the Detroit three – General Motors, Ford and Chrysler – are well placed to cash in on the trend.

Pickups and SUVs remain a pillar of profitability for Detroit, accounting for more than two-thirds of U.S. automakers’ global pre-tax earnings, even though they make up just 16 percent of North American vehicle production.

So far this year, they account for 77 percent of Chrysler’s U.S. sales, 68 percent of Ford’s and 54 percent of GM’s. compared with roughly 45 percent for Toyota and Honda and less for other rivals.

Electric and hybrid vehicles that account for 2 percent of U.S. sales, are the big losers, with October sales of Toyota Prius down over 13 percent from a year ago, Ford C-Max down over 22 percent and Chevrolet Volt sales down about 29 percent.

The challenge for carmakers is how do you adjust to buying patterns that follow wild swings in gasoline prices?

AutoNation’s Jackson says you simply can’t and recalls 2008 when prices spiked above $4 in the summer to end the year around $1.60.

“I was trading in Escalades on Smarts and by December they wanted the Escalade back.”

Among Detroit’s Big Three, Ford is betting that fuel economy will remain a selling point, investing in its redesigned, more aluminum-intensive F-150 full-size pickup truck.

Chrysler appears to be hedging its bets with its U.S. sales chief Reid Bigland talking of “very limited” impact of gas prices so far. General Motors Chief Economist Mustafa Mohatarem struck a more optimistic note, saying the improving U.S. economy and its newly-found energy self-sustainability should sustain Americans’ appetite for size.

“All else equal, Americans want large vehicle they can drive long distances.”

(Additional reporting by Paul Lienert; Editing by Tomasz Janowski)