Experts discuss how gasoline prices affect trend in product sales

Article by Anita Panait, on June 8, 2012

Fuel prices typically influence the consumer demand for vehicles. Likewise, fuel prices also influence how dealers stock their supplies and mix their products. According to Dennis Virag, president of Automotive Consulting Group, when fuel prices fall, dealers are expected to stock more sports utility vehicles and pickup trucks, adding that the mix in vehicles sold changes with gasoline prices.

Virag remarked that larger vehicles like SUVs and pickups have higher profit margins, and they help the dealer as well as the original equipment manufacturer. Ford sales analyst Erich Merkle, meanwhile, said that dealer demand is dependent on consumer needs. In May 2012, consumer demand for fuel efficient vehicles was lower than in April and March.

According to data compiled by University of Michigan Transportation Research Institute researchers Michael Sivak and Brandon Schoettle, the average fuel economy of cars and light trucks purchased in the United States in May was 23.7 mpg; down from 23.9 in April and 24.1 in March. However, the figure in May is still the fourth-highest average mpg for a month on record and up 3.6 mpg from October 2007. The figures were derived from monthly sales of light-duty vehicles and combined city/highway ratings gathered from the EPA Fuel Economy Guide.

According to Schoettle, consumers are more likely to purchase larger models if there is a noticeable reduction in gasoline prices and the unemployment rate. Schoettle remarked that carmakers have been building more fuel-efficient vehicles, and even if consumers are sticking with their big vehicles, those vehicles are also becoming more fuel efficient.

Despite this trend, both Virag and David Champion, senior director of the Consumer Reports Automotive Test Center, agree that fuel economy will remain a major factor in the future.

According to Champion, consumers with large SUVs like the Chevrolet Suburban will “migrate” to smaller options such as the Chevrolet Traverse and the Ford Explorer. Merkle, meanwhile, predicts that consumers will prefer smaller cars in the long run.

If you liked the article, share on:

Comments

Recommended

Porsche introduces the technologically advanced wheels with braided carbon fiber. These will be initially available on the 911 Turbo S Exclusive Series. Being the first car manufacturer to offer such...
by - August 23, 2017
All eyes were turned to the fuchsia pink bespoke McLaren 720S MSO at the 2017 Pebble Beach Concours d’Elegance Sunday. Surely, we can understand why. The one-off supercar, which was...
by - August 23, 2017
Hyundai Motor Group – including both Hyundai Motor and Kia Motors – has disclosed a wide-ranging plan to introduce 31 environment-friendly models in a new development roadmap that aims to...
by - August 22, 2017
Over a decade ago, Pagani took the Zonda to the Geneva Motor Show. The Zonda hypercar was then set to retire in 2013 together with the track-focused Revolucion. But here...
by - August 22, 2017
The newest Porsche Cayenne is scheduled be unwrapped by the end of the month after completing endurance tests worth 2.7 million miles. Since we are just a few weeks away...
by - August 22, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries