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Cheap Gas Fires Up Big SUV Sales, Slows Electric Cars, Hybrids

More cars and trucks are being bought in the U.S.—and fewer of them are gas sippers

By Benjamin Hulac and ClimateWire | September 8, 2015

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Consumers in the United States bought automobiles in the four months from May through August at the fastest clip in more than a decade, propelled by strong appetite for trucks, sport utility vehicles and crossover models and by low gas prices.

Light-vehicle sales for August surpassed 17 million units for the fourth month in a row, measured at an annualized, seasonally adjusted rate, according to automotive data company WardsAuto. The last time that happened was 2000, the firm said.

Compared against August last year, total sales were down less than half a percent for all light-duty vehicles, and light car sales were down about 10 percent. But light-duty truck sales—up a little more than 8 percent for the month, despite the fact that Labor Day sales will be counted in September—pushed some models to record sales totals and buoyed results overall.

Ford Motor Co., the second-biggest player in the United States by market share, reported a 5 percent increase and the greatest sales volume since 2006. “Consumer demand for our newest vehicles made August a strong month for Ford,” Mark LaNeve, vice president for marketing, sales and service in the United States, said in a statement. “We also had our best month of Ford SUV sales in 12 years.”

Like cross-town rival Ford, which saw sales of its brawny Mustang and immense Lincoln Navigator models jump 70 percent or more, General Motors Co. and Fiat Chrysler, the smallest by market share of the former U.S.-owned and so-called “Big Three,” reported sharp increases in demand for many of their largest vehicles.

General Motors sold more than a quarter of a million cars in August, down from the same month last year, but buyers snapped up Chevrolets, pushing the brand’s truck sales up for the 16th month straight. Sales for Chevrolet’s Silverado climbed 20 percent, and Tahoe deliveries rose 5 percent; it was the best performance for both models since 2008. And GMC, the maker of freight-hauling, burly pickups, had its best month since 2005, the company said.

Fiat Chrysler also reported a monthly gain: The company’s U.S. division had its best August since 2002, as eight Fiat Chrysler cars sold in the country set sales records.

“In spite of a tough 2014 comparison and extreme stock market volatility, our dealer’s competitive spirit kicked in and propelled us to our 65th-consecutive month of year-over-year sales increases,” Reid Bigland, the head of U.S. sales for Fiat-Chrysler, said in a statement.

Market fundamentals look good
“All of the economic fundamentals that we look at, including job growth, disposable income and fuel prices, are in good shape and that should keep sales strong,” Kurt McNeil, vice president of General Motors’ U.S. sales operations, said in a statement. Sales at Toyota Motor Corp., the third-largest player in the U.S. market, declined about 9 percent.

Economists consider rising demand for and orders of durable goods—items expected for work for three years or more, such as appliances, furniture, heavy machinery and vehicles—as an indication of improving consumer sentiment and a rosier economy.

And wings of the federal government haven’t overlooked the industry’s growth and brisk business.

The U.S. Department of Commerce said Wednesday that new orders of manufactured goods rose in July by 0.4 percent.

Transportation equipment—including light trucks, utility vehicles, heavy trucks, and vehicle bodies, parts and trailers—fueled an increase with a 5.5 percent gain in new factory orders. Shipments of transportation equipment, which climbed about 3 percent in July, pushed up shipments nationwide. According to Commerce Department data, heavy-duty truck sales in June and August this year reached their highest volume since January 2007, before the global financial collapse. And the Bureau of Labor Statistics said Friday that businesses that produce and maintain motor vehicles and parts added about 6,000 jobs in August alone.

“The majority of auto dealer contacts indicated an increase in sales since the beginning of July compared with the same period last year, and many expect the trend to continue through the fourth quarter,” said the Federal Reserve Bank of St. Louis, summarizing business activity in its region in a report published last week. “Several dealers reported a shift toward more high-end and new cars. One dealer reported record sales of its high-end models. A few contacts noted that low gas prices continue to have a positive impact on demand.”

Flagging interest for fuel-sippers
In the same report, officials from the Federal Reserve Bank of Kansas City, which covers central Plains states between Wyoming and New Mexico and Missouri and Colorado, described flagging interest for more fuel-efficient cars.

“Dealer contacts noted increased sales of larger vehicles such as trucks and SUVs, and slower sales for small and hybrid cars,” the bank said. “Auto inventories fell modestly, although most contacts expected levels to rebound in the next six months.”

The latest figures from the Electric Drive Transportation Association, a trade group that advocates electric, electric-hybrid and fuel-cell car technology and infrastructure, reveal a diminished share of the car market.

Cars that either partially or entirely use electricity to function make up slightly more than 3 percent of the U.S. auto market, the lowest share since 2011 and a sharp contraction from 3.5 percent last year, according to EDTA.

Meanwhile, the AAA motor club predicted in a statement called “Gas Prices Under $2 on the Way” that drivers over the Labor Day holiday weekend would pay the lowest gas prices since 2004. In the winter months, when there are fewer drivers on the roads and refineries are typically finished with autumn maintenance, gas prices could dip below $2 per gallon by Christmas, AAA said in an August report.

Americans are also driving more, whether or not they’re directly influenced by low prices at the pump.

The Federal Highway Administration, housed within the Department of Transportation, said in mid-August that Americans drove more in the first half of the year than ever before in the same time period. U.S. drivers covered 1.54 trillion miles in their cars from January through June, besting the previous record of 1.5 trillion miles set in June 2007.

“This is more than double the amount driven during the same period in 1981, continuing a trend of America’s driving mileage doubling nearly every generation,” FHWA said.

Reprinted from Climatewire with permission from Environment & Energy Publishing, LLC. www.eenews.net, 202-628-6500


1Comments | Post your own comment

  • Vince Adams comments:
    "Comments from my Friend Jack Olver an electric car owner in Montereym Ca
    “Americans have never been the brightest bulbs in the bin when it comes to buying cars and that is playing out once again. After years of being informed of the devastating impact of burning fossil fuels US consumers, now presented with the gift of cheap oil, are buying gas guzzlers at a record pace. This is like getting on the scale and seeing that you’ve lost a pound and therefore deciding to eat nothing but cheese cake for the next month.” "

    September 16, 2015 a 2:58 pm


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