The SUV love affair isn't over yet

In a report on GM's sales in China, there's a link to a CNN video about falling gas prices. (Douglas McIntyre blogged about the report earlier today.) Apparently, lower gas prices are making some American consumers think about buying SUVs again. We've heard so much about smaller cars lately, and hybrids and new technologies. But this report -- and basic knowledge of American culture and consuming habits -- suggests that these improvements are a long way off.

The American love affair with large, inefficient vehicles shows no signs of ending anytime soon. Even though gas prices are still over $2 per gallon in most parts of the country -- and nearly $2.50 per gallon on the west coast -- they are low enough to bring visions of unlimited power and size back into many consumers minds.

Are we really that shortsighted? I suspect so. And you can bet that General Motors Corporation (NYSE:GM) and Ford Motor Company (NYSE:F) and Chrysler hope we are. The last few quarters have shown just how much the American auto producers rely on SUVs to make money. When consumers start demanding better and smaller cars, the red ink begins to flow through Detroit. American companies simply cannot compete with the Japanese when it comes to fuel efficiency and small cars.

This raises the interesting question of what is really in the best interest for the United States. Should we hope (and fight) for cheaper gas so that Detroit can make money and Americans can satisfy their fantasies of power on the roads, or do we bite the bullet and try to design more efficient vehicles? It may be that the short term interests of Detroit and the American consumer are at odds with the long term interests of the country.
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