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Sorry, but using small business experience is not a good way to analyze a national marketing phenomenon. The U.S. auto industry has tens of thousands of dealerships and also, with the internet, direct sales. They are hardly pushing maximum sales due to limited floor space.I have to disagree with you andEpicurus....
I was in business for a couple of decades and worked for 3 Major Usa Corporations...and during this time period, one of the calculations that we often used in our analysis of our business, was the dollars per square foot that we were making in each of our stores.... in the space that each one of our stores had, including the stock space it took to house the product off of the "showroom" floor....or the display floor in a dept store.
If your space is limited, then dollars per square foot is a very important measure and a measure that you want to RISE.....
Why? Because if your space is limited, and you can only show a consumer so much product, yet you wanted to increase your sales, there are only two ways to do this...
One- Is turning your merchandise faster.
This means that you keep prices about the same....with lower end product, and you try to sell a hell of alot more of them a month to come out with beating your sales of the previous year....(And this is difficult to do, because your space is LIMITED so you DO NOT have the stock space to own or stock all of these cheaper cars that you would need to sell to beat last year...every inch of your floor and stock space matters...)
Or
Two- Take the easier approach and focus your customer on the higher end product, that sits on the same amount of floor space, (showroom for a car dealer) and stock space (parking lot of the dealership).....
Instead of having $12k autos, you have $25k autos sitting and using about the same amount of space.... You only need to sell half the amount of these $25k autos to give you the same sales as the $12k autos, using the SAME amount of property....and limited property at that....
So, we used to focus at all of my jobs, on "upgrading" the customer in to a higher priced product. I was in the shoe business, so if a customer asked for a certain product, we had a rule to have the sales person bring out the shoe the customer wanted, AND AN UPGRADED, similar, but Designer product, at a much higher price....about every tenth customer went for it....the upgrade but some stores had it down where every three customers out of ten would buy the upgrade and other stores where you could tell the sales people did not follow the mandate to bring an upgrade out too, with what the customer wanted sold no upgrades.
Just simple things like this can make or break a business... we HAD NO MORE SPACE, we leased spaces in department stores and they refused to give us more of it...the only way for us to do better, was to increase how much we could sell with the limited space we had and selling the "SUV" would have been the more profitable route to go...
Bottom Line
The car industry most certainly makes more off of an SUV than a car in more ways than one, and they would be foolish as business people to ignore this and not have this in their business plan to increase....so this is why i disagree with your dismissal of such.
And yes demand has alot to do with it, I do agree...but supply does also, and so does the focus of the industry that supplies us...the marketing and advertising that does CREATE the demand...its a multi billion dollar business...marketing and advertising....every corporation has a huge marketing staff, they are part of every product development meeting!
Care
In fact, it's quite the opposite. Big honkin' SUVs are a major ticket item compared to smaller cars. They could have pushed smaller cars as the greater affordability of them would have significantly outpaced the larger ticket of big SUVs. But smaller cars is not what J.Q. Public wanted. So the auto companies gave J.Q. Public what they wanted.
And J.Q. Public was not worried about fuel prices because the economy had caught up and significantly surpassed the inflationary pressures of the last fuel crisis.
It is a simple matter. J.Q. public, as a mass, are not as easy to push around as you think. And J.Q. Public liked the idea of the SUV as introduced under that nomenclature in the late 80s. But they also wanted the room to be "soccer moms" as provided by the much maligned mini-van. So the demand was for the SUV type of vehicle (ie 4WD, performance power plant, etc.) coupled with the idea of the mini-van type vehicle (Large capacity, comfortable interior, easy to drive, etc.) The result was what is basically a series of luxury 4WD trucks. Its what the public wanted, and what the public were given.
SUV ads were not aimed at increasing overall sales of SUVs. They were aimed at getting the consumer to buy GM SUVs instead of Ford SUVs. (and vice versa) When Ford came out with a new item to make their SUVs better, GM and others were not far behind with either a copycat idea, or a different idea.
For crying out loud, even Cadillac started building trucks. Because that is where the demand was ALREADY, not because thats where they wanted the demand to be.
