High gas prices have buyers turning to smaller new cars – if they can find one
Unlike during the 2008 gas price runup, today’s SUVs are more fuel efficient. The smaller ones are often built on the same chassis as automakers’ subcompact cars.
Adam Lee knows the drill. He’s seen it before.
When fuel prices spiked during the Great Recession, buyers flocked to his family’s auto dealerships to buy gas-sipping small cars.
“Everyone was trading in their big SUVs and trucks, and we sold every small car we could,” said Lee, chairman of Lee Auto Malls in Maine.
Now cars are coming into vogue again, though this time people aren't ready to give up their SUVs.
With gas prices hitting new records around the country, Cox Automotive reports that compact cars are third behind performance cars and minivans as the quickest-selling vehicle type on dealer lots.
Buyer interest in hybrids, plug-in hybrids and pure electrics was up 84% this month compared to February, Edmunds.com reports.
Yet maybe because the Russian invasion of Ukraine has only taken place in the past few weeks – with the corresponding rise in the price of fuel – Americans aren’t ready to surrender their SUVs.
“People aren’t going from Ram trucks to a Nissan Leaf or an Altima,” Lee said.
Emphasis on SUVs, EVs
Unlike during the 2008 gas price runup, today’s SUVs are more fuel efficient. The smaller ones are often built on the same chassis as automakers’ subcompact cars. Plus, SUVs of all sizes generally command higher prices, making them more profitable than cars for automakers.
With drivers preferring SUVs’ high seating positions and extra room, motorists are sticking by them.
“Once people get into small SUVs and see the convenience of them, they won’t go back to small sedans,” said Ian Beavis, chief strategy officer for AMCI, an automotive marketing firm.
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That’s fortunate for automakers, particularly because of all the small-car models they have ditched in the past few years, leaving them vulnerable to a market shift if gas suddenly became precious and expensive.
Gone are subcompacts, compact cars and hatchbacks like the Honda Fit, Toyota Yaris, Buick Regal and Chevrolet Cruze. Ford went so far as to kill off its entire car line – Fiesta, Focus, Fusion and Taurus – leaving only the iconic Mustang. In their place it has introduced a bevy of new SUVs and pickups and put an emphasis on electrification.
The disappearance of once-popular smaller car models has left the door open to newfound popularity for those that remain. Honda’s Civic is so in demand, for instance, that “dealers are virtually preselling every one that can get,” said Honda spokesman Carl Pulley.
'Everything is selling'
That’s in keeping with what Lee said he’s been seeing at his dealerships.
There’s only a handful of new vehicles for sale on his Honda and Toyota lots, and not a lot more at the others. Instead, his sales force is preselling cars to customers who then might wait weeks or months for them to be delivered. About 25 to 30 new cars and trucks show up every day, he said, going straight to buyers.
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Supplies are still constrained due to the coronavirus pandemic, but demand hasn’t let up, thanks to the vibrant economy that is luring customers wanting a whiff of that new-car smell.
“The economy is strong, wages are high. People are earning more than they used to earn,” Lee said.
It’s not just cars.
“Everything is selling."
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