DETROIT -- Automakers that rely on mid-sized and large trucks for profits are at great risk if oil prices shoot up to $80 or $100 a barrel, a new study concludes.
Today, it is the Big 3 that are primarily at risk, with lineups anchored with high-profit trucks and SUVs. But as other automakers push into those segments, such as full-sized trucks from Toyota and Nissan, their exposure increases.
If oil prices climb to $80 a barrel, the auto industry would see its pre-tax profits drop by $11.2 billion. And nearly 300,000 jobs would be lost, says the study, conducted by University of Michigan's Office for the Study of Automotive Transportation and the National Resources Defense Council, an environmental advocacy group. The report was released Wednesday.
If oil jumps to $100 a barrel, which would equal a pump price of about $3.37 a gallon, job losses would rise to about 465,000, the study says. Pre-tax profits would drop by $17.6 billion.
Crude oil for future delivery was selling at about $59 a barrel on Wednesday.
"You don't have to get to $80 a barrel to see some of the impacts on the industry," said Walter McManus, director of the Office for the Study of Automotive Transportation and a co-author of the study.
McManus, formerly an analyst at General Motors and J.D. Power and Associates, said one goal of the study was to challenge the notion that consumers don't make vehicle buying choices based on fuel prices.
Instead, the study found that as fuel costs have risen over the past three years there was a corresponding increase in incentives for fuel-thirsty vehicles such as pickups and SUVs. That has masked the impact of fuel costs on consumers' decisions, McManus said.
If oil prices shoot up and stay high, the Big 3 would be faced with closing as many as 14 assembly and parts plants in the Midwest and Canada -- plants that make trucks, SUVs and rear-drive components, the study concludes.
"If we don't have declining prices of oil, (the Big 3) have a lot a risk in the Midwest," McManus said.
But the oil-price issue is not confined to the Big 3.
As Nissan Motor Co. and Toyota Motor Corp. expand their product lineups with larger trucks and SUVs, they become exposed too, said Roland Hwang, vehicles policy director for the Natural Resources Defense Council. The group, based in San Francisco, lobbies the federal and state governments on environmental issues.
Hwang said, "This has to be a matter of national urgency. We need it out there for robust debate."
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