Unlike the majority of investment-related blogs out there we do not focus much time and effort on security or industry analysis. Every once in a while we come across some items that give us pause. This time around, the question of SUVs and their impact on the fortunes of America’s two remaining automakers.

There is little debate on the fact that SUVs, and their big pickup truck cousins, have had a disproportionate profit impact on the bottom lines of Ford (F) and General Motors (GM). It does not take a soothsayer to see that as consumers adjust their expectations to $3 gasoline (and up) that SUVs, absent any sort of hybrid or diesel assistance, will become increasingly less attractive.

The bigger question is why did SUVs become all that popular in the first place? Robert H. Frank in the New York Times attributes the SUV craze to the “herd instinct.” Frank notes that economists have come around to the fact that human irrationality can have economic effects.

Clearly, the herd instinct can lead us astray. For the most part, however, the impulse to emulate others serves us well. After all, without drawing on the wisdom and experience of others, it would be almost impossible to cope with the stream of complex decisions we confront.

Frank looks at the common factors behind the rise in SUV sales and finds that none of them are all that compelling. While cheap gas and rising incomes played a role, the notion that SUVs were somehow safer or more spacious than their car-like substitutes does not really hold water. That leaves something altogether more difficult to measure – a desire to emulate wealthier and more successful individuals.

An important feature of the herd instinct is that people are more likely to emulate others with higher incomes. Seeing a wealthy studio executive behind the wheel of a Range Rover instantly certified it as a player’s ride. As more and more high-income buyers purchased these vehicles, their allure grew. And when other automakers began offering similar vehicles at lower prices, S.U.V. sales took off.

These outsize profits eventually drove all of the foreign automakers to follow suit. Although they had different takes on the SUV they were able to make a significant dent in the domestic’s sales and profits. Even a company like Porsche, much to the purists’ dismay, eventually succumbed to the SUV dreadnought.

The dreams of continued profits from these large vehicles is not dead. Nick Bunkley also in the New York Times reports on GM’s introduction of a new line of large pickup trucks. Speaking of which, Joe Weisenthal at DealBreaker.com views this news from GM and Ford as downright “depressing.”

We in the investment business have a tendency to attach the word “bubble” to those phenomena that we cannot readily explain. Can you say Pets.com? In retrospect the SUV craze was simply that, a craze. While there is a small segment of the population for which a SUV is the best option, for the vast majority of SUV owners there were better choices. In a world of $3 gasoline, nay $5 gasoline, drivers and auto executives alike are going to come to terms with a new (more sober) reality.

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