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  • Essay / 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 car design and styling in the 1920s, automakers have invested in innovation to quench the thirst of the American automobile buyer (Pauwels, Silva-Risso, Srinivasan, & Hassens, 2004 , p.143). When I was young, September was the time of year when car manufacturers 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 station wagons of the 1970s but built on a truck chassis. These vehicles were seen as rugged and capable of off-road use. Since they were considered trucks, they were less regulated than cars and had poor fuel economy. Nonetheless, these vehicles gained popularity due to their versatility and low gasoline prices at the time. However, gasoline prices in the United States increased in the summer of 2003 before declining in the fall to levels that prevailed in the spring of 2003. Gas prices began a new upward trend in January 2004, which 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 United States Energy, 2011). It is reasonable to expect that increases of this magnitude in gasoline prices would incentivize consumers to purchase more fuel-efficient vehicles for their transportation needs. The trend during the 1990s in the United States was wiped out...... middle of paper ...... data reports year-over-year sales declines for full-size SUVs. Examples of their reports include a decline in Ford Expedition sales of 33.6%, Cadillac Escalade of 16.3%, and Chevrolet Tahoe of 11.9% (Healey and Eldridge, 2004, p. 10). Today, gas prices hover between $3 and $3. At $4 per gallon, customer demand for SUVs has shifted from full-size SUVs to the more fuel-efficient, economical midsize and crossover models, where miles per gallon are significantly higher than models sold in 2003, generally offsetting the increases in gasoline prices. The hypothesis test along with supporting data validated the existence of a correlation between gasoline prices and full-size SUV sales through increased manufacturing price incentives. This correlation could have been used to guide corporate strategies for future models in the SUV market class..