An ever increasing consumer appetite suggests an ever increasing consumer demand for the product, which automobile manufacturers were willing to accommodate by increasing the supply. In this case, supply and demand are completely independent of any ethical considerations; the demand was there, manufacturing increased the supply in response.
Should they have made efficient vehicles? Only if they were going to sell; it would be interesting to see what the demand back then was for highly efficient vehicles. I'm guessing it wasn't high.
Having low fuel efficiency apparently didn't matter to consumers, because the price of fuel was relatively low as well. Once the price of fuel increased, demand for gas-guzzlers declined in favor of fuel efficiency.
Let's look at this the way that a business textbook would.
In business textbooks, this would be categorized as an issue of social responsibility, which is a subset of business ethics. There are two ways to look at a firm's social responsibility.
First, there is the economic model of social responsibility. In this model, the firm's responsibility is to create jobs and make a reasonable profit while providing high-quality goods at the best possible price. From this point of view, there is absolutely no problem with what the manufacturers were doing.
Second, there is the socioeconomic model. This model asks firms to look at the way in which their decisions impact society as a whole. From this point of view, it is possible to argue that the manufacturers' actions were unethical. From this point of view, we can say that the firms had a responsibility to make cars that would not contribute to global warming or to what is seen as an excessive dependency on fossil fuels.
So, the ethics of this situation depend largely on the perspective from which one looks at this issue.
I suppose you are asking this question with reference to the massive environmental concerns that there were at the time regarding the ozone layer and the increased awareness that there was and is about the impact of burning non-renewable fossil fuels and how it is bringing us closer to environmental oblivion.
Well, I suppose how you answer this question is going to depend massively on your own thoughts about the environment. A number of scientists think that climate change is not produced by mankind and our activity on earth, and so they would obviously say that businesses were right to try and maximise profits by selling SUVs. Even if you do believe in climate change, you would find it very difficult to get anybody to listen to you if you wanted to ban all car manufacturers from marketing their product because of the massive vested interest that there is in car sales.
In addition, we could argue that businesses are not held to any ethical guidelines regarding the environment and car sales, and so it would be unreasonable of us to expect them to willingly embrace a loss when they could have marketed their product more aggressively and made a higher profit. Therefore this is a question that it is very difficult to answer conclusively as there are so many different possible responses.
the whole question was " was it ethical during the 1990s for automobile manufacturers to attempt to accommodate an ever-increasing consumer appetite for SUVs with their low fuel efficiency? was it good business?