What’s Driving the Increase in Truck and SUV Sales?

Low gas prices generally means higher truck sales.
Low gas prices generally means higher truck sales. –iSTOCK

Automakers have released their sales numbers from February, and while the harsh winter appears to have taken a toll on purchasing of small cars, including sedans, SUV and truck sales grew significantly.

Sales for GM’s Chevrolet Silverado were up 24 percent from last year and GMC Sierra pickups were up 6 percent, according to Reuters.

Most people are attributing the strong showing among bigger cars to low gas prices.

And auto executives expect that this trend will continue if gas prices stay low, The Wall Street Journal wrote.

A story on ABC affiliate WIJA’s website said, “with cheaper gas, big trucks are back.’’

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Investor’s Business Daily, USA Today, and the New York Post all published stories which report something along the same lines.

But does a gas price really directly reflect truck sales? After all, everyone knows gas prices can vary dramatically. Does the current price actually change what people decide to buy?

iSeeCars.com, the car buying and research website, recently did a study to answer that question.

“There is a lot of news about lower gas prices fueling increased sales of light trucks,’’ Phong Ly, CEO of iSeeCars.com, told Boston.com. “We wanted to dig into data to see if that is really confirmed if we do a math correlation analysis.’’

From 2012-14 people did in fact buy more trucks when gas prices were lower, the study found. SUVs followed a similar trend, but did not have as strong of a correlation.

What iSeeCars.com found was that for every dollar decrease in gas price per gallon, truck sales go up about 2 percent.

The next question is whether that connection makes sense for buyers. Are people getting themselves in trouble if they splurge for a more expensive, less fuel-efficient vehicle because they’re counting on low gas prices to make up the difference?

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Gas prices generally rise about 30 to 50 cents each spring, but it is true that the U.S. Energy Information Administration predicted that 2015 gas prices would be the lowest in 11 years, and that families could expect to save more cash than in previous years.

The EIA does expect the price per barrel for oil to increase slightly in the coming years, though it is uncertain what the exact amounts will be.

“They are stretching their dollars to keep up with monthly payment,’’ Ly said of people who buy a truck or SUV that might normally be out of their price range. “What if gas prices start to go up, what will happen?’’

Another iSeeCars.com study showed that in the majority of the metropolitan areas they studied, people are driving cars they can’t necessarily afford based on their medium household income, Ly added.

But Jessica Caldwell, senior analyst for Edmunds.com, cautioned against dire predictions.

“If you look at the concentration of people buying light trucks, a lot are buying compact crossovers,’’ she said, as compact crossovers tend to be smaller SUVs. Not all SUVs are gas guzzlers anymore, she said, so the fuel costs for these compact crossovers are no longer as high as they were seven or so years ago.

Caldwell said these people might be able to still afford the car even if gas goes up. She said that light trucks have now outsold cars for 18 straight months, showing that February was not an anomaly.

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