The Economic Perspective: “What’s Behind the Death of the Small Car?”

This is Mary Walden with economist MW, welcoming you to the economic perspective.  Today’s program asks, what’s behind the death of the small car.  Mike, several auto companies have announced they are phasing out small sedans and compact cars in favor of larger cross-over vehicles, SUVs, and trucks.  This represents a major shift in the auto industry.  Why is it happening?

 

Mike:  Summary Answer

  1. Four reasons
  2. Larger vehicles have been more profitable to automakers than smaller ones
  3. Second, recent changes in environmental regulations have caused auto makers to reduce their focus on fuel efficiency, which smaller vehicles provide
  4. And, with gas prices lower, drivers aren’t not as focused on fuel efficiency
  5. Last – more and more drivers like the versatility, spaciousness, and safety of larger vehicles
  6. Interesting to see if trends continue
  7. I’m MW

 

Mary:  And I’m Mary Walden for the Economic Perspective, an NC State Extension program from the Department of Agricultural and Resource Economics