With Barrel of Oil Less Than Half What It Cost in July, Will SUVs Stage a Comeback?

With Barrel of Oil Less Than Half What It Cost in July, Will SUVs Stage a Comeback?

The cost of a barrel of oil is down more than 50 percent from its July 3 high closing price of $145.29. Gasoline prices are below $3 per gallon in most parts of the U.S. So, automakers can crank up those SUV factories again, right?

Wrong, Automotive News states in an article published Thursday (subscription required).

Even with oil closing below $70 a barrel these days, almost no one expects rapidly falling gasoline prices to restore pickup and SUV sales.

"The driver of new-car sales has and always will be job and income growth," George Pipas, Ford Motor Co.'s sales analysis and reporting manager, is quoted as saying. "There is scant little right now. In fact, they're contracting, not growing."

When October sales are tallied in two weeks, lower fuel prices won't translate into higher sales of pickups and SUVs, Pipas predicted. The weak economy, not lower fuel prices, will steer buyers to less expensive vehicles, he believes.

"You'll see a return of growth in small cars in October," the magazine quoted Pipas as saying. "We will see small cars grab a higher share of the segment in October than in September. We'll see SUVs and trucks fall."

Mark LaNeve, GM's vice president of North American vehicle sales, service and marketing, said lower fuel prices might cause some consumers to consider putting a pickup or SUV back on their shopping lists.

But when October sales are reported, he doesn't expect much of a shift in demand for pickups and SUVs. And he has ordered GM's marketing team to keep pushing fuel economy in the company's advertising.

Said LaNeve: "Long term, there will be upward pressure on the price of oil. Consumers are seeking fuel efficiency in every segment."

In the past week, the price of gasoline fell more than 33 cents per gallon nationwide, according to the Energy Information Administration. In early July, the pump price peaked at $4.16 per gallon. That triggered a run on small cars and slowed sales of pickups and SUVs.

The tipping point for the move was $3.50 a gallon, Ford executives said.

Scott Doggett:  is an AutoObserver.com Associate Editor.