Is $350 per Gallon the Tipping Point for Car Sales?

#Ford, #Ford
Gas Price

Alan Mulally blames gas prices for the instability in the U.S. vehicle market. Once consumers faced $3.50 per gallon gas, SUV and truck sales started to lose steam. Mulally doesn't see the trend reversing in the near future, so Ford announced reduction in production for the rest of the year today.

I can't say I'm surprised to hear Americans are starting to consider smaller vehicles, but I still don't think trucks and SUVs will disappear so quickly. I think Americans like to complain about the price of fuel, but we're slow to change our habits to reduce our fuel consumption. Sure, some people are shelling out far too much money to buy used Geo Metros, but I'm not ready to believe most people would go so far to reduce fuel consumption.

Will increased gas prices force you to drive a smaller vehicle, or will you just plan your trips better? Maybe you aren't going to change anything. Let me know where the tipping point is for you in the comments.

Source: Automotive News

It would be wise for Americans to keep their current cars longer and avoid buying new cars altogether. It's a good way to offset the high fuel costs. My car is 22 years old and only gets 20 miles per gallon, but it's reliable and PAID FOR. I can't see spending 15k or so on a new Honda Fit or 20k+ on a Prius econobox. The mileage on those cars isn't even that impressive. If Volkswagen decided to bring its Polo 1.2 diesel over the North American market, then the case could be made for a new car purchase. A Volkswagen delivering 70 miles per gallon is tempting indeed. The Prius is a poor investment.
Anybody not too busy counting $10,000 bills would have seen this coming two years ago and would have planned for it to take advantage of it. But that's what happens when you get distracted by easy money. Ford should have had its Transit and Transit Connect, its S-Max, its 'World Ranger' diesel as well as several other models on deck and ready for this at least a year ago. The good news I see is Americans actually responding in their purchasing habits rather than assuming it will just go away.
Americans are keenly attuned to gasoline prices. It's probably amusing to Europeans, for whom high fuel prices long have been a way of life, to see Americans fretting so at the pump. I agree with my colleague Phil that, for those who truly need or really want a pickup truck or SUV, high fuel prices won't deter them from continuing to purchase those vehicles, or at least to drive the ones they already own. But as for the millions of people who have since the early 1990s bought SUVs and pickups as personal transportation simply because they thought they were cool? Well, those days are over, and the Ford Motor Company is wise to reevaluate its sales forecasts to reflect the new realities of the market.Joe DeMatioAutomobile Magazine

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