A few years ago, drivers across America
went into panic mode as gasoline prices soared
to nearly $4.00/gallon (or higher in some locales) in 2008.
During that time, people started ditching their SUVs/pickups and
more efficient cars.
As gas prices have started to level out
below the $3.00/gallon mark, one car company has been especially
hard: Smart. Smart, a division of Daimler AG, has seen U.S. sales
free fall since hitting a high mark of 25,000 units for all of 2008
Automotive News Europe.
For the first seven months of 2010,
sales are down 70 percent compared to the year before. Globally,
sales are down over 20 percent and sales will dip to below 100,000
unit for all of 2010 compared to 114,000 in 2009.
There a number of possible reasons for
the soft sales in the U.S. The Smart is a cramped two-seater with
very little room for cargo. While this might have been acceptable to
some U.S. customers when it seemed like the sky was limit with rising
gas prices, many likely aren't willing to make that sacrifice today.
Another more likely scenario is that
there are plenty of larger (yet still compact) vehicles available on
the market for the same money or slightly more than the Smart and
seat 5 people plus cargo. A standard Smart fortwo will cost you
around $13,200 with A/C. Stepping up to the slightly more opulent
Smart fortwo "passion" costs about $14,600.
For that price, you get 33 mpg in the
city and 41 mpg on the highway in return (while requiring premium
unleaded gasoline). For comparison, the $15,000 Honda Fit returns
28/35 while the $13,000 Toyota Yaris returns 29/36 -- both vehicles
can seat five.
Another competitor, the $14,000
Ford Fiesta, achieves 29 mpg in the city and 40 mpg on the
With competitors approaching the
mileage of the Smart while offering vastly superior passenger/cargo
room for roughly the same money, it shouldn't be too shocking that
sales are falling.
quote: That's a good thing.
quote: Needless consumer spending does not help the economy.
quote: Like it or not, cars have become more of a fashion statement than a mode of transportation.
quote: people want the newest and greatest model to show off to their friends as a status symbol
quote: And as a result, millions of fully functional used cars are junked every year.
quote: Saving money and spending it has pretty much the same economic impact.
quote: The bank then uses the loan you gave them to buy things which stimulates the economy.
quote: Now we have millions of new cars sitting on lots that aren't being bought. I'm not sure how that's any better.
quote: Who determines what's "needless" though? You apparently.
quote: And no, that's not the broken window fallacy. This is like the fourth different topic I've seen you apply that to. You're wearing it out a bit much don't you think? I realize you've learned something new and it's exciting, but it doesn't apply to EVERY situation!
quote: That makes no sense. They are ALL modes of transportation. And sorry, I'm not going along with your statement that the majority of car sales are "needless" fashion statements. If you have the data, show it. But I seriously doubt that statement could ever be quantified. It's your OPINION.
quote: This is SO judgmental and condescending I won't even dignify it. Stop interjecting your opinions and prejudices as if they were facts.
quote: On the bank using your savings thing, if you feel that money deposited in a bank does not contribute to economic velocity, then there's no point arguing further.
quote: a good example is the SUV trend in the last two decades. The vast majority of people who bought them never used them to go off-road or to tow anything.
quote: I still think consumer confidence is low, though
quote: A lot of people can't afford a new car every 2-3 years like they could 7 years ago. Consumer confidence is really low.
quote: They probably couldn't afford it 7 years ago either.
quote: And that's why most consumers are in trouble with credit right now.