Some car dealers see boost in business
In 2008, the last time gas prices took a steep turn north, consumers went out in droves to trade in their trucks and SUVs for smaller, more fuel-efficient vehicles.
Some local car dealers say they’re beginning to see that again, now that prices are back up to $3.50 a gallon and predicted to continue climbing.
“We’re just starting to see that now – within the last 30 days or so,” said Rick Labrie, senior vice president of Toyota of Nashua. “The Prius has got some renewed action. Corollas, too.”
Sales manager John Marino agreed:
“The traffic has picked up tremendously on the Prius and anything that’s hybrid. As gas goes up, it’s actually great for us at Toyota. We boom when gas goes up.”
Others, however, are convinced that consumers aren’t going to rush to trade in their gas guzzlers this time around.
Jim Kacavas, general manager at Allen Mello Dodge in Nashua, said many people who rushed to trade in their trucks or SUVs ended up with cars they didn’t really like.
“As of right now, I haven’t seen anything like the panic in ’08,” Kacavas said. “Most Americans are going to drive what they want to drive regardless of gas prices.”
Peter McNamara, president of the New Hampshire Automobile Dealers Association, said he has also heard stories of some consumers regretting their 2008 small-car purchases.
“One dealer had spoken to me about a customer he had who traded in his large truck for a smaller, fuel-efficient vehicle,” McNamara said. “Then, when gas prices went down in August, he traded back in for a truck.”
Consumers tend to have fairly short memories when it comes to the pain of high gas prices, according to Edmunds.com and LeaseTrader.com. The American appetite for large SUVs and trucks is as high, if not higher, than before the 2008 price spike, according to data from the websites.
In June 2008, near the peak of high gas prices, four categories of vehicles – large trucks, large SUVs, midsize SUVs and premium SUVs – held a combined 11.5 percent of the market share, according to Edmunds. In February 2011, they held a combined 15.5 percent.
The large-truck segment saw the most growth, increasing from 7.8 percent of market share to 11.2 percent.
“Having watched consumers react to gas price fluctuations in the past, I am seeing that consumers are now less inclined to let the price at the pump affect their vehicle choices,” Edmunds senior analyst Jessica Caldwell said in a prepared statement.
Also, in a survey of 500 drivers who used LeaseTrader.com to trade in an SUV because of gas prices in 2008, roughly 58 percent are back in an SUV today.
Better fuel efficiency could explain some of that. Manufacturers are constantly producing trucks and SUVs that get better gas mileage than their predecessors.
Kacavas said Chrysler just came out with a new V6 engine that gets an extra four to six miles per gallon.
Craig Weisman, owner of S&J Motors in Merrimack, said he doesn’t think people will panic about high gas prices the second time around. The dealership was flooded with people looking to trade in their SUVs in 2008, but that hasn’t happened at all this year, he said.
“It was kind of a shock then,” Weisman said. “People are used to it now.”
According to McNamara, dealers prefer gas prices to be stable. When gas prices fluctuate, they have a harder time planning their inventory to match what customers want to buy.
“Manufacturers are in the same boat because they don’t know what models to build,” he said.
However, new car dealers don’t have much of a say in what their inventories look like.
“Unfortunately, the manufacturer dictates the availability,” said Labrie, the Toyota of Nashua vice president. “We’d like to have so many Priuses, but the manufacturers give an allotted amount based on how many you sell.”
Toyota of Nashua also owns the Hybrid Center of New England, which specializes in selling used hybrids and other fuel-efficient vehicles.
In the wake of the disaster in Japan, it may be even more difficult for dealers to get hold of the inventory consumers are more inclined to buy when gas prices are high.
Japanese automakers announced last week that manufacturing would be halted until at least Tuesday, according to the Detroit Free Press.
Although most foreign cars are assembled in the United States, a long-term halt in production could have ripple effects here, the article said. The Prius, which has increasingly been in demand as gas prices have gone up, is manufactured only in Japan.
This story posted by LeaseTrader.com, the automotive service company that lets people transfer out of their Car Leases early. If you're looking to swap a lease or transfer out of your car lease, please visit www.leasetrader.com