The SUV market is slumping, according to The Globe and Mail, sending GM and Ford debt into junk status thanks to S&P. I am not surprised. Perception is reality, especially in the car market.
Point-of-pain economics is relativistic: the point at which a price increase results in a systemic failure — the tipping point — is all based on perception.
If you can control — or at least manage — perception-of-pain, then you can control — or at least manage — markets. Cluetrain states that markets are conversation, I state that markets are perception.
The yearly difference in cost between gas at $2 and $2.30 is negligible (based on my SUV — a 97 Land Rover Discovery SD at 12-miles-a-gallon with around an 18-gallong tank — $2,000/year at $2 and $2,300 at $2.30 — only $300-a-year) but that is not the issue, the issue is brand perception: instead of feeling empowered by their SUVs, they’re embarrassed by their SUVs– and that is sliding into shame.
The amount of money saved on gas by buying a Hybrid is a wash as the premium of the purchase counteracts any savings if you do the numbers.
The perception is not rational, it is entirely emotional. And so in order to control — or manage — perception when threatened with widespread panic is to appeal on an emotional level. The rational approach of “listen, our gas is so cheap compared to the Brits and the Euros at $5-per-gallon,” doesn’t work.
Oil prices are just another nail in the coffin.
As the saying goes, the only thing that would incite we Americans to riot is price of gas and beer.
The price of gas is an emotional issue. Why? Because it touches on something holier than gas and beer, it is the obsession with the automobile.
It has nothing at all to do with the environment. Let me repeat, it has nothing at all to do with the environment.
The environment has never effected the invisible hand much.
Once the American population again normalizes on gas at $2.50 or $3 (I am hoping for $5-a-
gallon, myself — that would show us) then we will start shamelessly buying SUVs again. Largess is in our nature, it is our character.
Another thing in America’s culture is the frequency with which we are blind sided and the number of times we can say, “yes, but this is different.” Really, we only make true adjustments as a nation when we’re skint.
