Back in 2008, when gas prices start spiking, GM, Ford, and Chrysler were all in trouble. They made much of their money selling SUVs and light trucks, so when people stopped buying gas-guzzlers and started buying smaller imports, the Big Three lost a whole lot of market share very quickly. Economic woe ensued.
But this time around, that’s not happening. U.S. domestic auto manufacturers are actually gaining market share even as gas prices have risen. In part, that’s because, as I reported here, Detroit has figured out how to make smaller, fuel-efficient vehicles that people want to buy. Here’s what this looks like in chart form, via the Rhodium Group’s Trevor Houser:
You can see quite clearly how U.S. auto manufacturing (in blue) plunged around 2005, just as oil prices (in green) started their inexorable climb upward and light-truck sales shriveled from 60 percent of sales to less than 50 percent in a few short years. Americans seemed to transition to smaller, more fuel-efficient imports, and domestic auto manufacturing never fully recovered. It’s been only in the past few years — and after an $80 billion government bailout — that Detroit’s fortunes have improved.
This is one possible reason why high oil and gasoline prices haven’t pinched the U.S. economy as badly this time around as they have on previous occasions. And it’s yet another way in which the United States seems to be adapting, albeit slowly, to an era of higher crude prices.