Americans looking to offset soaring gas prices with a more fuel-efficient vehicle probably won’t find much on the car lot today.
Sharp rise in fuel prices, largely due to the war in Ukraine and related disruptions, is causing yet another shock to the auto sector and sparking renewed interest in fuel economy after a multi-year boom in commercial vehicle sales sports and pickup trucks. It also comes as inventories of new and used cars on dealer lots are at historic lows, leaving buyers with slim choice for those looking to make a switch, according to dealers, executives and analysts. .
Average U.S. gasoline prices hit $4.33 on Saturday after recently breaking a record set in July 2008, according to AAA. A U.S. ban on Russian oil imports, revealed on Tuesday, is poised to push fuel prices higher in the near term.
Although still early, buyers are already showing more interest in gasoline-powered models, including hybrid and electric vehicles, according to dealers and analysts.
Bret Biornstad, a 62-year-old teacher living in Portland, Oregon, said rising gas prices prompted him to consider replacing the Kia Rio sedan he bought just a year ago. by a fully electric vehicle.
“With the gas prices and the invasion of Ukraine, it was kind of like, ‘I’m really going to seriously look at this,'” Mr Biornstad said.
Over the past decade, the auto industry has moved away from the small cars and sedans that have always been the benchmark for better fuel economy and focused on larger, more lucrative trucks and SUVs at a time when gas prices are low.
Buyers also shifted to larger, more fuel-efficient models, leading many automakers to drop some of their more fuel-efficient offerings in the US, like the Ford Fiesta, Honda Fit and the Toyota Yaris.
Nearly 78% of all vehicles sold last year were SUVs and trucks, a sharp reversal from a decade ago when these types of vehicles accounted for about 55% of total U.S. industry sales. according to data analysis company Wards Intelligence.
Auto executives are optimistic about increased electric vehicle sales, but the selection on dealer lots is still limited.
Many models, including those sold by Tesla Inc.
and Ford Motor Co.
have long wait times that span months and carry higher prices – selling for nearly $15,000 more than the average price paid for all vehicles in February, according to data compiled by the company. buying cars Edmunds.com.
“Are the dealers ready? Yes. We are pleased. We’re all about electric vehicles,” Mike Stanton, president of the National Automobile Dealers Association, said at a dealer rally in Las Vegas over the weekend. “We just don’t have the product right now.”
The nearly year-long shortage of new and used vehicles has further compounded the difficulties for buyers, driving up prices and leaving lots of new cars without inventory.
The inventory crisis is particularly acute for passenger cars, such as compacts, sedans and even some hybrids, according to industry data. Indeed, supply chain constraints have led many automakers to abandon building these cars to focus on higher-profit trucks and SUVs, analysts and executives say.
At the end of February, there were just over a million vehicles in transit or in stock at US dealerships, compared to 2.7 million in the same month last year, according to Wards Intelligence. And most vehicles are already pre-sold, which means buyers entering showrooms won’t find many options in the field, according to dealers and auto executives.
Typically, a $2 increase in gas prices is enough to change consumer behavior, but in today’s market it’s hard to quantify that change, said Jay Joseph, vice president of marketing and customer experience at American Honda Motor Co.
“We don’t see a real open market,” Mr. Joseph said. “If we had cars on the ground, I think we would see a temporary shift to passenger cars at the moment. But there is no supply of anything.
The auto industry has long struggled to adapt to sudden increases in the cost of fuel. In 2008, when gas prices topped $4 a gallon, the rush of small-car buyers was so sudden that some used models fetched prices close to new.
During the financial crisis, Detroit automakers, stung by rising fuel costs, pledged to better balance their truck and SUV lines with more fuel-efficient offerings, adding more small cars and sedans. , and even rolling out new electrified options. But the move was short-lived. Once fuel costs dropped again, buyers turned the other way and many of these models were killed off.
Yet the auto industry has dramatically improved the gas mileage of today’s SUVs and trucks, using lighter materials, smaller engines, and offering scaled-down versions of larger, popular body styles. .
In 2020, crossover SUVs averaged true fuel economy of 28.4 mpg, up from 23 mpg a decade earlier, according to data from the Environmental Protection Agency. Sedans and wagons, comparatively, are even more efficient, averaging 31.7 mpg in real-world driving, the EPA found.
“Even if you get something a little bigger, it’s more fuel efficient than it was back then,” said Jessica Caldwell, automotive analyst at Edmunds.
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Some car manufacturers, such as Honda, Toyota Motor Corp.
and Hyundai Motor Co.
, are better positioned to accommodate buyers looking for better fuel economy, mostly because they’ve stuck with their small car and sedan offerings. The challenge is that they don’t have many in stock, she added.
Dealers say at this time it’s too early to tell how much gas prices will impact buyer behavior, particularly because for most car buyers the lack of availability of vehicles remains a priority.
JP Miller, general manager of Paul Miller Ford in Kentucky, said the auto sector has weathered previous gas spikes in the past, making this increase less daunting. On the contrary, higher fuel costs are helping to raise public awareness of electric vehicles as automakers and regulators try to offer greener options.
“I think the pent-up demand is there, and that awareness allows them to see this new vehicle,” Miller said.
Write to Christina Rogers at [email protected]
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