Business Insight Zone

Ripped from today’s headlines:

GM Dealers Report ‘Resurgence’ in Pickup, SUV Demand

On the one hand, good for GM. Like the other Detroit automakers, they’ve been sitting on piles of unsold trucks and SUVs, and this helps them clear that inventory. (Then again, they’ve been doing it with all kinds of fire-sale tactics, including huge cashback and discount promotions.)

On the other hand, the consumer choices behind this resurgence may be ill-informed:

“We’ll see some stabilizing in pickup and SUV sales now that gasoline prices are off their high mark,” Erich Merkle, a Grand Rapids, Michigan-based analyst for consulting firm Crowe Chizek & Co., said in an interview. “Part of the problem for buyers was they didn’t know when gas prices would stop rising.”

Merkle’s comment is fine — and, I’m sure, accurate — insofar as it goes. But to give us a better look at the future, I would reword it this way:

“We’ll see some temporary stabilizing in pickup and SUV sales now that gasoline prices are temporarily off their high mark. Part of the problem for buyers was they didn’t know when gas prices would temporarily stop rising.”

I say this because plenty of oil-price watchers think that oil prices still have a long way to climb, their recent decline notwithstanding.

It will be a shame if many consumers buy SUVs and pickups now, lulled by temporarily less-horrible pump prices, only to see a gallon of gas go to, say, $5.50 in the next year.

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Related posts:

• Should oil get more expensive?
• $134.13
• How inelastic is gasoline?

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(Photo by Mykl Roventine.)

Category: Energy, Transportation