Topic > Sport Utility Vehicle - 1910

For as long as there have been roads to drive on, Americans have had a love affair with their cars and trucks. Since consumers became interested in the design and style of automobiles in the 1920s, auto manufacturers have invested in innovation to quench the thirst of the American car buyer (Pauwels, Silva-Risso, Srinivasan, & Hassens, 2004 , p. 143). When I was young, September was the time of year when car companies introduced new models, generating excitement and of course new sales. In the 1990s and 2000s, a new generation of vehicles was introduced, the Sport Utility Vehicle (SUV). This was a marketing term for vehicles similar to 1970s station wagons but built on a truck chassis. These vehicles were perceived as rugged and capable of off-road use. Because they were considered trucks, they were less regulated than cars and had poor fuel economy. However, these vehicles grew in popularity due to their versatility and the low gasoline prices of the time. However, gasoline prices in the United States increased in the summer of 2003 before falling in the fall of the year to levels prevalent in the spring of 2003. Gas prices began another upward trend in January 2004, which is lasted until May of the same year before starting to moderate again. The average price per gallon achieved in May 2004 was 39.1 percent higher than the average for May 2003, and the average for May 2004 was 22.5 percent higher than the average price achieved in September 2003 (Department of US Energy, 2011). A reasonable expectation is that increases of this magnitude in gas prices would motivate consumers to purchase more fuel-efficient vehicles for their transportation needs. The trend throughout the 1990s in the United States had been characterized by paper data reporting year-over-year sales declines for large SUVs. Examples of their reports include a sales decline for Ford Expedition of 33.6%, Cadillac Escalade down 16.3%, and Chevrolet Tahoe down 11.9% (Healey, & Eldridge, 2004, pp. 10) . Today, with gas prices hovering between $3 and $4 a gallon, customer demand for SUVs has shifted from large SUVs to more fuel-efficient midsize and crossover economy models, where miles per gallon are significantly higher than models sold in 2003, generally offsetting increases in gas prices. Overall, this hypothesis testing along with supporting data validated the existence of a correlation between gas price and full-size SUV sales through increased manufacturing price incentives. This correlation could have been used to guide company strategies for future models in the SUV market class.