The year 2015 was huge for cars.
It started off with a thrilling Detroit Auto Show in January and didn’t lose a step for the next 12 months.
The main lowlight was the massive Volkswagen emission-cheating scandal, but there was also some alarming car hacking and the grim repercussions of the deadly Takata airbag and GM ignition switch recalls.
One story rose above all others, however.
Specifically, the plunging price of the substance the fuels the vast majority of vehicles on planet Earth.
Less than $2 a gallon?!
The oil-price collapse translated into sub-$2-a-gallon prices for many Americans at the pump. This was one of the biggest drivers of a stunning recovery in US auto sales from the depths of the Great Recession. By the time the maths is finished on 2015, nearly 18 million new cars and trucks will have rolled off dealer lots, a record.
It’s hard to overestimate the importance of cheap gas to the American Way of Life, which for better or worse is completely bound up with driving. Just a few years back, everyone in the auto industry was deeply concerned, almost terrified, that gas prices were going to plateau at around $4 a gallon, then begin a steady march to levels that would make the internal-combustion engine cost prohibitive.
Automakers raced to build smaller, more fuel-efficient cars. A vision of widespread electrification transformed Tesla from an exotic luxury startup into a powerful force in the business of transportation.
Other factors were at play — a weak economy, tight credit, crumbling infrastructure — but overwhelmingly it was expensive gas that had everyone freaked out.
Now, of course, people with small cars and hybrids can fill up for less than $20 some parts of the country. And the big trucks and SUVs that send profits surging through the automakers’ veins are selling exceptionally well once again. There’s a significant difference between spending over $100 each week to gas up your Chevy Suburban — and spending half that.
Did this catch the entire auto industry by surprise?
In fact, it did. And it hurt some car companies. The most worrisome risk in, say, 2011 or 2012 was whether you had too many gas-guzzlers in the fleet. You were staring down both the high price of gas and federal fuel-economy regulations that didn’t favour these vehicles. It was a scary, looming double-whammy.
But then when the price of gas swooned, if you had the moneymaking SUVs and pickups to serve what is after all the meat of the US market, you were in great shape. Punitive risk shifted to car makers that lacked pickups and large SUVs — they were stuck trying to move unappealing sedans and small cars.
Not to mention hybrids, which lost much of their allure, even though cheap gas greatly reduced their operating costs, as I discovered when I bought a Prius and commenced monthly fill-ups for a fraction of what I had been paying to keep the tank full in just one of the two cars I used to own.
Maybe in the future gas and cars won’t be so closely linked. But that future is a long way off. And we were reminded of it unquestionably in 2015, when cheap gas got Americans moving again — and moving a lot.