Truck and SUV sales for Ford (F) and General Motors (GM)–and the large profit margins that go with them–have fallen off a cliff. F and GM are scrambling to replace land yacht sales with car sales, but the margins aren’t nearly as fat.
In the short term, anyway, the companies may catch a break–thanks to the bizarre financial logic of American consumers. Although Americans are buying more fuel-efficient vehicles, they’re still splurging on options. New York Times reports that from sunroofs, to satellite radios, to hands-free phone systems to even colourful interior lights, Americans are still shelling out (NYT):
“If you do the maths, financially it’s not worth it [to buy a souped up Mini Cooper],” Mr. Schafer said. “But we figured if we buy something that’s small and fun we can achieve some gas savings.”
Of course, while this trend is potentially an incremental positive for Ford and GM, it’s going to take a lot of heated seats to make up for billions in losses.
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