Oil Glut Is Good News For US Automotive Market
Projections for a sustained oil glut resulting from economic slowdowns in emerging markets like China and India — and the lifting of oil sanctions against Iran — signal a continued bull market at all levels of the US auto industry.
Lower fuel prices means more consumer spending power for cars. The vehicles they’re buying in record numbers are big Trucks and SUVs… the highest profit products for the carmakers.
Still smaller Crossover SUVs and even sub compacts will be more attractive for overall cost of ownership during this period of low fuel costs.
Environmentally minded buyers will see this as a good time to get ahead of an inevitable oil price surge, spend extra and take a leap of faith … sustaining and possibly pumping up sales of electrics and hybrids.
And with more disposable income in the economy, business class buyers flush with cash will make luxury brands sales soar.
On the downside if the slowdown in international markets becomes a serious economic crisis, especially in China, the precarious US debt position and huge stake the auto industry has there, could upset this rosy scenario.