Bill Pierce unfurls a gray stripe from its backing and presses it against the fender of a black Dodge Charger at a car dealership in Mobile, Ala. As a self-employed auto detailer, he’s worried about what he’s hearing from industry insiders – among other things, gas prices perhaps as high as $5 a gallon this summer. “It’s going to kill the car business and kill my stripe business,” he says.
No doubt about it, the price of gasoline is starting to make a difference in Americans’ car-buying decisions.
More than half of consumers say a gas price of $3.50 a gallon would affect their next vehicle choice, and at $5 per gallon, 95 percent say it would definitely be a factor, says Jack Nerad, a market analyst for Kelley Blue Book, an auto pricing firm in Irvine, Calif.
With gasoline prices close to $4 a gallon in some places, some Americans appear to be making a shift. Hybrid sales soared by 39 percent in February compared with the same month last year. The bestselling hybrid, the Toyota Prius, saw sales rise by 70 percent.
But will those gains continue?
Even when gas prices are elevated for extended periods, hybrids usually don’t inspire mass sales – the biggest detriment being cost. “People will say, ‘Yes, I would consider a hybrid,’ but when they’re actually forced to put their money down, that’s when the rubber meets the road,” says Mr. Nerad.
Availability might become another factor. In the wake of the Japanese earthquake and tsunami, Toyota has suspended production of the Prius.
Competition is yet another factor. These days, consumers have a wide variety of choices, and conventional, gasoline-powered engines are improving every year in terms of fuel economy. Some now get 40 miles per gallon for highway driving.
According to the latest Kelley figures, 42 percent of consumers researching new cars intend to swap for a smaller engine size, and 40 percent are considering switching to a smaller vehicle altogether.
Yet Americans still like big vehicles. Mr. Pierce says no matter how high gas prices go, he’d never trade his Toyota Sienna minivan or his Toyota 4Runner SUV for an electric car or hybrid. “It just takes too many years to recoup the expense,” he says.
