Americans rekindle their love for big SUVs
Remember the Hummer, the civilian knockoff of the military's Humvee vehicles, produced by General Motors (GM)?
Hummers are known for being gas guzzlers, getting around 10 miles per gallon -- a fact that hit hard during the recession. The last Hummer rolled off the production line several years ago, seemingly a relic of another era when fuel efficiency was a nonissue.
However, with the average price of a gallon of gas dropping below $3 and indications they might drop even further, it appears some consumers are having selective amnesia when it comes to the Hummer.
Demand for used Hummers, along with other brands of large SUVs, including those that made their names back in the 1990s, is again on the rise.
Industry observers say pent-up demand for those oversize vehicles may be behind the renewed interest.
"During the recession, consumers didn't buy much of anything but certainly not discretionary-type vehicles like big utilities and sports cars. Yet they still wanted them," Michelle Krebs, senior analyst at AutoTrader.com, told CBS MoneyWatch.
Krebs noted that the new versions of large SUVs and trucks are selling extremely well, thanks to lower gas prices, better mileage and some new offerings.
"General Motors, for instance, recently freshened its entire line of large sport utility vehicles (as did Ford this year)," she said. "GM's Cadillac Escalade, in particular, is selling very well -- so well GM can't keep up with demand."
Another factor is the current U.S. oil and natural gas boom. Eric Ibara, director of residual value consulting for Kelley Blue Book, says some experts are forecasting domestic production will continue to rise through 2020, which may in turn be causing some consumers to take a fresh look at the bigger vehicles available.
"Almost all of the sales growth seen this year has come from the utility segments," Ibara told CBS MoneyWatch, "while the sedan segments have been flat (note that overall auto sales are up 5.5 percent through the end of October). Hybrid and other alternative energy vehicle sales are down almost 12 percent."
"In this environment," he adds, "it is not surprising to see truck and utility sales increase, but it appears it is being helped by, rather than caused by, low gas prices."
Improved fuel economy also comes into play. Over the past several years, the federal government has tightened its so-called CAFE (Corporate Average Fuel Economy) standards for new vehicles. These regulations are designed to "improve our nation's energy security and save consumers money at the pump," according to the National Highway Traffic Safety Administration.
And those efforts have apparently succeeded. A report issued last month by the University of Michigan Transportation Research Institute (UMTRI) says automakers have been surpassing CAFE standards for their new models of light-duty vehicles, including SUVs, vans and pickup trucks.
"Due to advancements in engine design, trucks and utility vehicles now achieve higher fuel economy than they did even five years ago," said Kelley Blue Book's Ibara.
"While electric motors and hybrids get all the credit, direct injection and turbochargers have revolutionized the internal combustion engine, delivering more horsepower while gaining better fuel economy," he added.
"This has allowed V6's to replace V8's and reduced engine sizes, making larger vehicles more economical to drive. Ironically, rather than shifting consumers to smaller vehicles, it has enabled people to stay in the large SUV's that we know they prefer to drive."