More consumers in the United States are purchasing SUVs and pickups due to low gas prices. In 2015, both automobiles experienced a 10 percent increase in sales, according to a report from Autodata. On the other hand, fuel-efficient vehicles are experiencing low sales.
Case in point, sales of Toyota's Prius, the industry's hybrid pioneer, plunged by 12 percent this year. The Chevrolet Volt, one of the first electric plug-on cars sold in the market, dipped by 23 percent in sales.
"Buyers seem quick to respond to changes in gas prices, both up and down," says Brandon Schoettle who studies fuel economy at the Transportation Research Institute (TRI) in the University of Michigan.
In November, Mercedez Benz released SUV record sales while Ford's SUV sales rate expanded. Ford foresees that by 2020, SUV sales will make up 40 percent of its total sales. In a statement, Ford said their SUV sales continue to climb in North America and worldwide.
Autotrader senior analyst Michelle Krebs said that dropping fuel prices leaves more money to buy bigger cars. This aids in the sales surge of pickups and SUVs, which are more costly compared to sedans.
"When the economy is better and interest rates and gas are low, you're going to buy as [many cars] as you can," added Krebs.
The sudden hike in the sales of trucks and SUVs has lowered the average mileage of all automobiles being traded in the U.S. In November, the average mileage was 25 mpg, which was one mpg lower compared to the August 2014 record and prior to the gas price drop.
Credit Suisse analysts predict that the shift to gas-nuzzling vehicles will make the U.S. gasoline demand strong in 2016 through 2017. While about 10 percent of the global gasoline consumption is from the U.S., the shift to bigger cars is observed closely.
The analysts suspect that a combination of household debt reduction, household formation, payroll surge and plunging oil prices lead U.S. consumers to become more boisterous in choosing the cars they drive. The hike in U.S. jobs also contribute to more people buying bigger cars.
