NADA Talking Points on Auto Sales and Gas Prices

NADA Talking Points on Auto Sales and Gas Prices

Although gas prices declined slightly this past week, NADA prepared the following talking points for dealers on the impact of high gas prices on auto sales, which is generating substantial media interest.–If you havenêt yet received media inquiries on gas prices, you may soon, especially as the peak summer driving season arrives,” said Carroll Smith, chairman if NADAês Public Affairs Committee.–Therefore, we are providing you with some talking points below for handling media inquiries locally.”

Key messages:

àThe general mix of vehicles sold over the past few years hasnêt changed much, even as gas prices have risen. For example, SUV sales remain relatively steady, and crossover utility vehicle (CUV) sales continue to grow at double-digit rates. These are trends that pre-date the current fuel price rise.

àAmerican consumers are used to spikes in gas prices, especially during the peak summer driving season. However, if they start to believe that higher prices are here to stay, they may begin to make adjustments in their vehicle choices. Or if gas prices top $2.50 per gallon nationally, buying decisions may be impacted more significantly.

àNADA Chief Economist Paul Taylor projects that gas prices will decline by late fall or earlier.

àRefining capacity is a key factor affecting gas prices. Unlike past periods of high gas prices, diesel prices have not risen to levels that nearly equal gas prices.

àThe auto industry is demonstrating that it does care about fuel-efficiency. Thereês significant progress in the development of practical, fuel-efficient vehicles for wide use by consumers, and different engine choices for specific vehicles.

àHybrid vehicles, while representing only 1 percent of vehicles on the market today, are growing in popularity.

àConsumers buy hybrids for a variety of reasons, including environmental concerns and fuel-efficiency. They are selling largely to people who drive well over the 12,000 miles an average consumer drives per year. One reason is the higher cost $2,500 to $3,000 more than an equivalent vehicle with a gasoline engine making real savings on fuel at least several years off for typical drivers.

àNew hybrids are coming to the market over the next year in the popular –crossover utility” body styles. Ultimately, consumers will decide whether these vehicles continue to gain popularity. Manufacturers are providing choices with a selection of fuel mileages that meet consumer demands for performance, utility and comfort.

Additional Information:

àCrossover utility vehicle sales have grown more than 17 percent this year, followinga 35 percent increase in 2003 and 23 percent gain in 2002.

àThe average gas mileage for passenger cars is 22.1 miles per gallon (according to the Federal Governmentês National Transportation Survey).

àThe average gas mileage for light trucks is 17.6 miles per gallon (according to the Federal Governmentês National Transportation Survey.) Given the typical two-to three-mile-per-gallon reduction in fuel economy for four-wheel-drive vehicles, the difference in fuel economy for the average car and light truck is relatively small.

àThe number of licensed drivers on the road is growing by more than 2 percent per year on average, contributing to increased gas consumption.

àThe average annual miles traveled by car is 11,800 (according to the Bureau of Transportation Statistics).

The average annual miles traveled by light trucks is 11,100 (according to the Bureau of Transportation Statistics).Even with high-mileage commercial pickup trucks included, light trucks are driven fewer miles than cars, on average.