Wrong Predictions About Gas and Cars

Last Revised on November 20, 2007

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Few years back when cost of gas hit $3 per gallon, many experts start to believe that the way we live our life driving around will be changed forever. Automakers are thought to making more small, gas efficient cars than big gas hogging SUVs. It is true that lot of us worry about gas prices everytime we have to fill up our gas tank; but so far, predictions like these proved to be wrong or lets say didn’t happen yet:

1. Americans will reject big SUV cars. Large vehicles account for 27.9 percent of the market today, it accounted for 27.1 percent in 2000. The reason is that many families simply need big cars to transport kids or gear, no matter how much gas costs. And wealthy drivers don’t particularly care if it costs $60 or $70 (or even $150?) to fuel their megamobile.

2. Small cars will take over the market. When big automakers start to make Toyota Yaris and Honda Fiat hit the U.S. market in 2006, experts predicted that drivers would rapidly embrace the thrifty little, but gas efficient cars. However, crossovers took account for 17 percent of the market today, up from just 4 percent in 2000. Buyers love them because of their all-in-one versatility: Crossovers ride like sedans but sit higher, and many have flexible seating configurations and other features that make them more practical than the old SUVs.

3. Hybrid will be everywhere. Hybrid cars still represent just 2 percent of the market. That’s likely to grow steadily, but as automakers have experimented with different kids of hybrids, they’ve also hit some limits on consumer acceptance. Sales of the Honda Accord hybrid were so poor, for example, that the company stopped building it; prices starting at about $30,000 were simply too steep for pragmatic Honda buyers, who didn’t see much payback.

4. Drivers will freak out over soaring gas prices. A typical Cadillac Escalade driver, averaging 14 miles per gallon, spends about $280 per month on gas at current prices. His gas bill has gone up by about $150 since 2002. But along the way incomes have risen, too, and mortgages, representing a far bigger monthly expense, have gotten cheaper for millions who bought or refinanced at low interest rates. And while gas prices have risen by a bit more than inflation over the past 25 years, lots of other things people spend money on–like appliances, electronics, clothes, and, yes, cars–are a lot cheaper.

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One Response to “Wrong Predictions About Gas and Cars”

  1. anonymous Says:
    November 21st, 2007 at 2:15 pm

    gas prices won’t go any lower

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