Daily Management Review

Cheap oil is boosting sales of SUVs


06/16/2016


Due to the fall in oil prices and, consequently, of gasoline around the world, sales of SUVs, light trucks and other vehicles that consume a lot of fuel are growing. It is expected that this year SUVs and light trucks will overtake almost a third of all cars sold in China. Sales of such cars are also growing in the US and Europe.



Low oil prices contribute to increased demand for SUVs and other vehicles that consume a lot of gasoline; interest in the subcompact and economical models, by contrast, is reduced. According to official data, share of SUVs and light trucks in vehicle sales in China reached 35% in April. In 2010, their share was 10%, while ten years ago - less than 5%. SUVs are becoming more affordable for Chinese consumers. Now these cars are very popular among the Chinese middle class. According to official forecasts, it is expected that almost one-third of cars sold in 2016 will be SUVs and trucks, that is, 8 million of the 25 million overall.

The same trend, according to The Times, is observed in the United States. In the US, SUVs and light trucks accounted for 60% of sales. They reached almost equal share only in 2005, when oil prices were at the same level as now. Last year, the best-selling car in the United States was pick-up Ford F-150: there were more than 780 thousand pieces sold. Also, according to the company Jato Dynamics, which specializes in analyzing the car market, more SUVs than cars of any other type were sold in the past year in Europe.

As the President of the Energy Institute Ski Jim put it, "if fuel prices are getting lower, people are passing more miles, and we see increase in traffic." According to the US Energy Information Administration, gasoline consumption in the US will amount this year to 9.3 million barrels per day, exceeding the previous record of 2007. "Demand for oil has grown much stronger than we expected. We see that consumption of gasoline in the United States is quite significant, and should grow by 2.8% this year, or 255 thousand barrels per day," - said International Energy Agency in a statement. 

 






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