Jan 10, 2017

GM will make more money this year because of cheap gas

A better economy is boosting American's ability to spend on cars, but another reason for optimism is cheaper gas. Since oil prices cratered in 2014, the public has gotten used to paying less at the pump, making consumers more comfortable with buying gas-guzzling crossovers, light trucks and SUVs, which are also more profitable for automakers. GM expects the share of those vehicles to rise from 36% over the past six years to 52% between 2017 and 2020.

Quick Take: Expect this dynamic to affect automakers stance toward fuel efficiency standards. The Obama Administration has rushed to tighten fuel efficiency standards to go into effect between 2022 and 2025 before the president leaves office. Automakers will push hard to have this implementation reversed this year.

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