Bigger has always been better. But now that we live in a world of rising oil and gas prices, car manufacturers that have long peddled gas-guzzling SUVs are singing a different tune. Sales of large models have slipped, and automobile companies have responded by shifting toward more fuel-efficient vehicles. DaimlerChrysler
In September, high gas prices caused SUV sales to decline industrywide. General Motors'
While Chrysler's SUV sales were down in September, sales for the conglomerate overall actually increased by 4% for the month. A 69% rise in sales of Chrysler's Dodge Neon, a smaller car, helped the company's overall top line. After Chrysler and its competitors experienced recent sales declines as a result of fuel prices, Chrysler is clearly taking action to avoid future sales declines -- as it should.
It's important to note that, in the past, Chrysler has sold fewer SUVs than competitors GM and Ford have, leading one to believe that the company will have to do some work to differentiate its products to capture sales. These fuel-efficient SUV models might be just the ticket.
Given current gas prices and the continuing high levels at which they are projected to linger, this is a good move for Chrysler and its shareholders. At the very least, it's a good move on management's part to maintain market share and margins. If consumers are currently in the market for a new SUV, fuel-efficient models will become more alluring. Chrysler knows that, and its move lets consumers keep the option of maintaining their "bulk lifestyles" while helping to alleviate pain at the pump.
Jennifer Schonberger does not own shares in any of the companies mentioned in this article.