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Welcome back gas-guzzlers: Cheap pump prices herald SUV’s return

Hummer and other large SUV sales are poised to benefit from cheaper gas prices, experts say. ALEJANDRO PAGNI Collection: AFP

Make way for more Hummers and Escalades. That’s the opinion of auto experts who suggest sharply cheaper gas prices are priming sales of large trucks and sport-utility vehicles.

Canadian car buyers have been shifting away from sedans and other car models this year in favour of sporty crossovers that pack a bit more punch, practicality and perhaps style. But cratering gas prices are making their larger kin – like the hulking SUVs that were all the rage a few years back – popular again.

“With the fall off [in gas prices] the shift is going beyond the small crossovers,” Carlos Gomes, an auto industry economist at Scotiabank, said Monday.
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In the U.S., car sales are dropping to levels not seen since the heady years before the recession. This year, small car makes dipped to below a fifth of total vehicle sales – the lowest share since 2007. In their place have been double-digit sales increases in SUVs, crossovers and trucks.

“The trend is similar in Canada,” Gomes said.

Canadian vehicle sales hit 1.95 million last month (annualized), a pace just shy of the all-time mark of two million – notched in September.

Since peaking in June, gas prices have been falling steadily and sharply. Their descent has picked up the pace in recent weeks as gas chases oil prices that are grinding lower because of a growing global supply glut. Scotiabank expects oil prices to remain low well into next year.

MORE: Pump prices plummet to $1 a litre – or less – across Canada

Higher emissions

The return of SUV demand means emission targets a decade out are at risk of being missed, Gomes said.

Fuel economy in vehicles on North American roadways has been improving by about 6 per cent a year, Scotia said. That clip would be good enough to satisfy government-mandated targets set for 2025.

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But the resurrection of gas-thirsty trucks and large crossovers now makes hitting those targets look ambitious, Gomes said. “With the shift to larger vehicles this year, [fuel efficiency] is going to be roughly cut in half.”

WATCH: While you might drive away from the pump pretty happy, as Cindy Pom explains, there might be negative long term effects.

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