Chrysler Group, which depends more heavily on sales of pickup trucks and sport utility vehicles than any other Detroit automaker, expects petrol prices to remain at $US3 to $4 a gallon for the rest of this decade.
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The comments by Chrysler chief executive Thomas LaSorda, reported by the New York Times, are the first time a Detroit automaker has issued a specific forecast on petrol prices since they began climbing to $3 a gallon and higher.
Ford’s chief sales analyst George Pipas reportedly agreed that high petrol prices were not a temporary phenomenon, although he did not cite a price range. The analyst told the NYT Ford expected petrol prices to remain high, volatile and unpredictable.
Together, the comments signal a recognition that the two automakers may have to fundamentally change their product mix to put more emphasis on fuel-efficient vehicles – a move General Motors says it already is making, the paper noted.
LaSorda reportedly said Chrysler was planning internally as if petrol was $3 to $4 a gallon though he hoped prices would drop.
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By GlobalDataHe told the New York Times that Chrysler had prepared a business model based on the assumption that petrol prices would remain in that range for the next three to four years, about the period of time it takes for an automaker to develop a new vehicle.
The New York Times said, if Chrysler’s assumptions are correct, it spells more trouble in the near term for the traditional Detroit companies, whose sales and market share have dropped this year as consumers have shifted away from big vehicles to more fuel-efficient models – about 75% of the vehicles that Chrysler sells are pickups, sport utility vehicles and minivans, compared with about two-thirds of the sales by Ford and about 60% of the vehicles sold by General Motors, according to the industry statistics firm Autodata.
Toyota, Honda and Nissan model ranges are still more than 50% cars, one reason Japanese companies have achieved sales records in the US this year, the paper said.
LaSorda also said that Chrysler believed there would still be a market for vehicles that seat five or six passengers, according to the report.
Industrywide, pickup truck sales have dropped about 17% this year, while sales of sport utility vehicles are down about 9%. Car sales, by contrast, are up 3%, the New York Times said, citing analysts Edmunds.com.
Edmunds analyst Jesse Toprak reportedly said none of the Detroit companies thought high petrol prices would hurt sales so much and saw it as a temporary phenomenon.
The paper noted that petrol prices have dropped about 15 cents in the last two weeks, to a national average of $2.78 for unleaded fuel, and that has led some analysts to predict that prices have peaked for the year, since fuel is generally cheaper in the autumn than during the summer holiday season.
Asked about petrol prices, Ford’s Pipas, said: “We don’t see the price of gasoline returning to the levels that we all enjoyed in the 90’s and the early part of this decade. The base case assumption around which we’re planning our business is that gas prices remain high. The days of inexpensive gasoline are gone.”
The paper noted that GM has been promoting the fuel efficiency of its car lineup, saying it offers more models that get 30 miles per gallon in highway driving than any other company. To the end of July, those vehicles accounted for about 34% of GM’s overall sales for 2006, according to an estimate by Edmunds.
A spokesman told the New York Times that GM was paying more attention to the fluctuations in petrol prices, rather than the level itself. “It’s the fluctuation that makes people nervous,” he said.
Officials at Toyota and Honda, which have both gained market share this year because of their reputation for fuel efficiency, told the paper they were prepared for a sustained period of high petrol prices.
