One dominant myth of the US auto industry is this: American consumers want small (fuel-efficient) cars. In reality: Not so much. This runs counter to the claims (honest or otherwise) of various elected officials, and their auto industry buddies. To this day, I've yet to see any clear data that suggests Americans are demanding small, fuel-efficient cars, at least not over any meaningful period of time. But here is some data that shows the exact opposite:



What we see here is that over the period I examined, the popularity (as measured by new sales) of small cars decreased 49%, from ~40% of new car sales in 1990 to just over 17% in 2007, while Large SUV sales increased 2,575%, and Midsize SUV sales increased 392% over the same period. By 2007, these latter two categories accounted for 28% of US new auto sales in 2007, about the same combined market share as medium and large cars.

Contrary to the loud noises coming from Washington D.C., Detroit, and elsewhere, this chart proves beyond a shadow of a doubt that Americans are not, in fact, fans of the small car. Still don't believe me? Then perhaps you'd care to see what Small Car sales look like compared to gas prices:

Despite regular conventional gas prices increasing 113% (4.3% CAGR) since 1990, new car sales still decreased, as evidenced by the relatively significant negative correlation between the two. Interesting, huh? Let's take a closer look:

Over the horizon encompassed by this data, the trend away from Small Cars is undeniable, however, I say this with the caveat that it appears over short time periods, this trend slows, or over very-short time periods, may even reverse. As the above chart shows, when gas prices spiked ~30% in 2000, small car sales increased 9%, however, they subsequently decreased 37% while gas prices doubled. I would like to examine the more recent data showing gas prices spiking in 2008, but unfortunately, such doesn't appear to be available yet (if it is, please let me know!)

Note: For those playing the home game, I downloaded my data directly from the Department of Transportation, Bureau of Transportation Statistics, and The Federal Reserve, and the Department of Energy. I will also make all of my data and calculations available for (the more ambitious among) you to keep me honest.



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