Detroit’s carmakers voiced concern about the recent spike in US petrol prices on Thursday, but said it hadn’t hurt sales of the fuel-thirsty vehicles that account for a big chunk of their profits so far.
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According to Reuters, Paul Ballew, head of market and industry analysis at General Motors, acknowledged that the petrol price rise was something “at the top of everybody’s mind” in the US industry but he stressed that inflation-adjusted price increases had been far worse in the past and said there was no indication that America’s love affair with full-size pickup trucks and sport utility vehicles will end any time soon.
The news agency noted that GM, which sells the massive Hummer H2 SUV and a whole catalogue of other light trucks, is heavily dependent on revenues from the vehicles as are Ford and Chrysler.
“We have a long ways to go before we see gasoline prices get to the level where we believe it will materially impact our industry in terms of overall demand as well as the mix of the industry,” Ballew said in a conference call with Reuters and Wall Street analysts.
“A 30-cent-a-gallon increase in gas prices results in about $US200 a year in higher spending in terms of fuel for a vehicle,” he reportedly added. “That’s not inconsequential, but we certainly shouldn’t overstate it. That’s about $4 a week.”
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By GlobalDataBallew reportedly added that large pickups and SUVs tend to attract buyers with higher incomes, so the vehicles were unlikely to lose their attraction right away.
“I can attest that we look long and hard to see any changes in terms of vehicle mix, even in those regions where gasoline prices have gone above the national average, and we just do not see any evidence with regards to changes,” he said, according to Reuters.
George Pipas, Ballew’s counterpart at Ford, reportedly said, “I certainly wouldn’t characterise our view as not worried about it. I think it’s a concern.”
He told Reuters petrol prices were unlikely to cause an imminent shift in buying habits or a migration out of trucks and SUVs into small or mid-sized cars with better fuel economy, however.
Among other reasons, he reportedly said, fuel prices soak up a far smaller portion of household income today than 20 years ago.
“Fuel prices are at record levels,” Pipas told the news agency in a separate conference call. “We had six days in a row of higher fuel prices. Well, we have several months in a row of record household incomes too. And the question is one of affordability, not the absolute price.”
According to Reuters, Gary Dilts, senior vice president for sales at Chrysler, when asked about the impact of sticker shock at the pump, said, “So far so good. Right now we are not hearing fuel economy or gas prices as an issue in the marketplace.”
The news agency noted that GM, Ford and Chrysler all ratcheted up buyer incentives on some of their trucks and SUVs on Thursday, as they announced mixed US sales results for March, but none linked the roll-out of new deals, including beefier cash rebates, to the higher petrol prices.
But, Reuters said, Jim Press, executive vice president of the US arm of Toyota, said the spillover effect from spiralling fuel prices could soon be undeniable.
“We anticipate a dramatic shift into higher fuel efficiency models if oil prices remain high,” Press said in a statement cited by Reuters.
