After decades of speeding down a trouble-free road of success, the Sports Utility Vehicle (S.U.V.) hit a major oil slick in 2008, spinning out of control and plunging hood-long over the cliff's edge.
In case you missed the accident report, here are the gruesome details: First quarter ’08 saw a 26% drop in US sales of SUV’s from a year ago, an across-the-board slide that prompted General Motors to close four truck plants and prepare for the possible sale of its Hummer brand. In May, cars outsold trucks and SUVs by the biggest margin since 1996.
In the words of two of Ford’s marketing reps: “I think this is a watershed moment” -- and -- “The future of the SUV is on life support.” (LA Times) As for why -- the bulk of the entire auto industry has one unified answer: Rising fuel prices.
Last I checked, the term “gas guzzler” was not meant to be ironic. S.U.V.’s have always been known as fuel-burning “Hindenburgs” of the highway. Yet, that didn’t stop the model from flying off the lots in 2005, when gas prices soared from $1.80 to over $3 a gallon -- a price range (and popularity) that held steady until mid 2007.
Fuel prices are not killing the S.U.V. A reversal in mass social mood is, as described in detail by the July 2006 Elliott Wave Theorist’s special, two-part study titled “Social Mood and Automobile Stylings.” In this fascinating report, editor Mark Galasiewski drives home the following insights:
“Cars reflect the spirit of their times…During periods of rising social mood [as reflected by rising stock prices]” cars take on more “angular styles, boxier frames, wider windows. As the mood rises toward excess, consumers also demand more room, bigger engines, and more sophisticated stylings, prompting designers to push the limits of length, width and height.”
Conversely: A falling mood will see cars built of “simpler styling and smaller capacities” and for “increasing efficiency.”
(
S.U.V. + R.I.P. = B.E.A.R. In the
June 4, 2008 Socio Times post, editor Pete Kendall reveals the historic link between a slump in S.U.V. sales and a bear market in stocks. Access to Pete’s analysis is available via a risk-free subscription to
Elliott Wave Financial Forecast. Learn
More.)
To reinforce his analysis, Mark surveyed the past 85 years of automotive history, covering almost three complete cycles in the stock market. The correlation between a rising mood and muscle cars, and falling mood and minis is unswerving. To wit:
(1921-1949)
1921-1929, Bull Market: Ever wonder where the phrase, “It’s a doozy” comes from? The “Duesenberg J.” Debuted 1928. The prototype for the large, boxy, high-performance vehicle.
1929-1949, Bear Market: “Flash and dash” no longer sold. Focus on simplicity and economy. The “Coupe” is born. 1938: Volkswagen Beetle began production as Hitler’s “People’s Car.”
(1949-1982)
1949-1966, Bull Market: Structure and speed epitomized by the Thunderbird and Cadillac.
1966-1982, Bear Market: US carmakers in shambles, Chrysler on the brink of bankruptcy. Volkswagen Beetle and bus become flower-painted canvasses of the sixties’ cultural revolution.
(1974/1982 to Present)
1974/1982-2000, Bull Market: 1974: Jeep Cherokee, earliest beneficiary of the craze for “off road SUV” debuts. 1991: American General Hummer, civilian version of the US military Hum-vee epitomizes “consumer extravagance and excess” of economic boom. 1999: General Motors purchased the brand name, just in time for the end of the major bull market. 2000: Ford began production of the largest SUV ever, Ford Excursion.
2000-present Bear Market: (As reflected by DJIA measured in real terms, i.e. ounces of gold) 2008: String of headlines “SUV Sales Run Out of Gas” (LA Times) “Has the Death of the SUV Arrived?” (ABC News) “SUV: On the Road to Nowhere” (Financial Post) “Hummer on Death Row” (AP)
(Editor’s Note: The June 4, 2008 Socio Times post reveals why May’s collapse in SUV and light truck sales is a “sure sign that the bear market is gaining steam. Check out the full story today.)