Business/Economy, National, Randal O'Toole, Transportation

General Motors scaling back on cars because consumers prefer SUVs

The news that General Motors is going to stop producing a lot of cars has created a lot of confusion, making it appear that GM is near failure. In fact, this announcement parallels a similar one from Ford earlier this year and one from Chrysler in 2016: all three companies are focusing on Sport Utility Vehicles (SUVs) and other truck-like vehicles rather than cars. The main difference was that GM, unlike Ford and Chrysler, accompanied its announcement with a list of several factories that it planned to close.

The reality is that Americans have good reasons to prefer SUVs over cars, and GM, Ford, and Chrysler are simply responding to market demand. One of the most important advantages SUVs have is comfort: because they are taller, they have a higher hip point or H-point, meaning riders are sitting upright with their feet well below their hips instead of sticking out in front of them.

Before World War II, most cars had a high hip point, and it wasn’t until after the war that low-hip-point popular vehicles (as opposed to sports cars) were pioneered by Studebaker and Kaiser. Curiously, the vehicle regarded as the first SUV, the Willys Jeep station wagon, was also made by Kaiser for many years.

The second advantage of SUVs may be even more important: visibility. Again, because the vehicles are taller, drivers can see further down the road, plus they can often see over the tops of many cars.

Some people say that SUVs also have a higher center of gravity and so are more likely to roll over. However, most SUVs today are equipped with vehicle-stability control and similar technologies that significantly reduce the potential for rollover and similar accidents.

On the other hand, some people say that people prefer SUVs because their occupants are more likely to survive being struck by larger vehicles. I’m not convinced that’s necessarily true (many small cars are very safe), but I suspect most auto buyers are more concerned about the day-to-day stresses of driving than the remote possibility of a serious accident, so the visibility factor is a higher priority for them.

Because they are taller, SUVs tend to be less fuel-efficient than cars. However, the emergence of crossover vehicles — vehicles with many SUV characteristics that are also fairly aerodynamic — has reduced this difference. Historically, when gas prices are stable, Americans have increasingly tilted to SUVs and other truck-like vehicles, and gas prices appear to be very stable today.

In any case, the decisions of major automakers to stop making vehicles that people aren’t buying shouldn’t be regarded as a sign of economic troubles. It is simply a reflection of changing technologies and consumer preferences.

Randal O’Toole is director of the Transportation Policy Center at the Independence Institute, a free market think tank in Denver.  This article originally appeared in his blog, TheAntiplanner.

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