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Will higher gas prices hurt SUV sales? Analyst is sounding alarm

USA TODAY logo USA TODAY 5/27/2018 Eric D. Lawrence
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Has the epitaph for the sedan been written a bit too soon?

With gas prices hitting $3 in some cities across the country this week and generally rising across the country for months, a prominent automotive industry watcher is pointing to changes she says could mean a boost for the lowly passenger car and spell trouble for big trucks and SUVs.

That position is a bit of a break from some other analysts who have downplayed the potential that gas price increases could change vehicle buying habits. They note that SUVs are more fuel efficient than in the past.

Consultant Maryann Keller raises alarms in an article on social media site LinkedIn, noting that rapid gas price escalation has tempered buyer enthusiasm for large vehicles in the past. She also cites the RVI Used Vehicle Price Index, pointing out that wholesale prices of sedans are increasing while SUVs are decreasing.

Keller said gas prices are up in part because of oil production cuts in Saudi Arabia and Russia, and she noted that these increases come as the summer driving season starts.

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Yet Ford recently announced a highly publicized decision to stop selling most sedan models in the U.S., and General Motors is cutting production at the Ohio plant that makes the Chevy Cruze sedan. Fiat Chrysler Automobiles had previously jettisoned the Dodge Dart and Chrysler 200 to focus more on SUVs. 

GM officials and CEO Mary Barra, have, however, said that passenger cars remain an important piece of the company's portfolio.

The potential market changes are playing out as the Trump administration is backing away from higher mileage requirements, a position that has prompted outrage and warnings from some consumer and environmental groups.

Robert Weissman, president of the advocacy group Public Citizen, was particularly pointed in his comments after Ford's sedan announcement:

"Fat on profits from SUV sales in the early 2000s, the Big Three automakers drove themselves to the brink of collapse with their failure to plan for the inevitable rise in gasoline prices."

Contact Eric D. Lawrence: elawrence@freepress.com. Follow him on Twitter: @_ericdlawrence.

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