This is actually quite smart. Time's economics blogger Justin Fox writes:
over the past 20 years the short-to-medium-term fortunes of the U.S. carmakers seem to be dependent mainly on one thing: The price of gasoline. The impressive return to profitability of Detroit's Big Three in the 1990s was in retrospect almost entirely attributable to the global oil glut that sent prices at the pump down and kept them there. Detroit makes its money on SUVs and pickup trucks, not on compact cars. Those don't sell well when gas costs a lot.
This is an obvious enough point, I guess, but I still thought it would be cool to plot GM's stock against the price of gas to see if the chart backed up the theory. It does.
Here's the graph:
What you'd expect to see on the chart, if Fox's hypothesis is correct, is that GM's line dips low when gas's shoots up, and vice versa. And, sure enough, that's roughly the reality. It's not perfect, but then you have to assume GM's sales will be affected by promotions they run, and consumer confidence, and all the rest. Moreover, the public impression is, I'd bet, that gas costs are now unstable, and that even months of low prices at the pump don't promise enduring affordability for a fuel-guzzling vehicle. GM needs a success in the economy market, but it's hard to simply pull even with Japanese automakers who spent the last 30 years learning, advancing, and perfecting the form, while their American counterparts focused on ever bigger, ever more powerful roadway behemoths.
