It's time for another edition of good news, bad news. The good news: Sales of domestic vehicles are up this month over the same time last year and are on pace to nearly match the 12.3-million-vehicle pace of October, according to Bloomberg News. That's good news for the U.S. auto industry, which continues its climb out of the 2008 gutter, and for the U.S. economy more broadly. After all, confident consumers buy new cars; scared ones don't.
Now for the bad news, at least from my point of view: Strong domestic vehicle sales were driven mostly by a surge in truck and SUV sales. Deliveries of Ford F-Series pickups were up 30 percent, Jeep Grand Cherokee sales were up 41 percent and Chevrolet Equinox SUV sales were up a whopping 75 percent.
I wrote about the potential negative effects of rising truck and SUV sales for individuals a few weeks ago, but the consequences for the U.S. economy as a whole could be even more damaging. First off, one of the big factors that nearly brought down the U.S. auto industry in 2008 was over-reliance on big, inefficient trucks and SUVs. When gas prices jumped that year, people stopped buying and fled in droves to smaller, more efficient Japanese cars. I worry that the industry will forget the lessons of 2008 and go back to milking the truck and SUV cash cow that will surely go dry the next time gas prices spike. Feel like paying for another bailout?
And aside from having to call the wahmbulance for owners when gas is over $4, the other problem with a truck and SUV boom is it decreases the overall efficiency of the U.S. fleet. Since the U.S. has the highest number of vehicles per capita in the world, the efficiency of our fleet has a major impact on demand for gasoline. A thirstier U.S. fleet could mean more and bigger gasoline price spikes in the future, and a population less able to cope with such spikes financially. Money that would normally be spent on food, education, clothing or whatever would instead be funneled en masse to oil companies.
That in turn could make high fuel prices an even bigger drag on the U.S. economy, hurting even those who chose the most fuel efficient vehicle that could meet their needs. In other words, do not ask for whom the low-fuel light dings, it dings for thee.
To be clear, I'm not saying people who actually need SUVs and trucks for their intended purposes of hauling a lot of passengers or a lot of gear are wrong to buy them. I'm just saying that when a consumer makes the decision to buy a bigger vehicle than they need just because gas prices are stable and they can afford it right now, it could hurt everyone's wallets in the long run.
So if you're doing well enough financially to afford a new car, for your own finances and those of your neighbor, please resist the temptation to buy the biggest, least efficient vehicle you can and instead seek out a higher mileage vehicle. Trust me, you'll thank me later when gas is $5 a gallon.
What do you think? Could a boom in gas-guzzlers hurt the economy?