Heavy discounting of new cars and trucks appears to be offsetting concerns about rising petrol prices, even when it comes to the sale of big pickups and sport utility vehicles, analysts and motor industry executives reportedly say.
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“We haven’t seen any statistically relevant changes of volumes … within a car line or between the different styles,” Chrysler Group chief executive Dieter Zetsche told Associated Press (AP).
“Obviously we’re watching that carefully,” he reportedly added, noting that Chrysler’s May sales are faring well.
According to AP, Goldman Sachs analyst Gary Lapidus predicts new vehicle sales in May to be up 5% from a year ago, despite petrol prices that are 50 cents-a-gallon more than this time last year. Other analysts are forecasting sales to be up 1 to 5%, giving a kick to what’s been a somewhat sluggish sales year so far, the report added.
“We see little evidence that high gasoline prices are deterring light truck buyers,” Lapidus said in a Wednesday research note cited by Associated Press.
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By GlobalDataAP interviewed several dealers around the US, who said shoppers often mention fuel prices, and some customers have chosen smaller models with better fuel efficiency, but most still seem unfazed by prices at the pump.
The news agency said a rise in May sales will almost certainly be the result of beefed-up consumer incentives, particularly on trucks and SUVs. The report noted that Detroit’s Big Three pulled back a bit on the deals in April and paid the price with lacklustre results.
AP said that, in early May, General Motors, Ford and Chrysler all tweaked deals on their SUVs – GM’s current programme, for example, includes $US1,000 cash back plus zero percent financing on loans of up to five years on models such as the Chevrolet TrailBlazer and GMC Envoy.
Some observers told AP that worries about rising interest rates, more than surging petrol prices, could be causing people to postpone purchases.
“U.S. auto sales have disappointed for the first four months of the year, but a more promotional market in May appears to have spurred demand,” Merrill Lynch analyst John Casesa reportedly said in a report.
According to AP, Casesa predicts a 2% rise in sales for GM, a slight decline for Ford and a slight increase for Chrysler and adds that Toyota, Honda and Nissan will post solid performances in May.
Zetsche told AP it was difficult to say what Chrysler’s final result would be for the month, particularly when about a quarter of sales can take place in the final few days.
“That makes all the difference between a good month and a poor month,” Zetsche reportedly said. “So far, this month is looking good.”
Bear Stearns analyst Domenic Martilotti told Associated Press that higher oil and petrol prices could be causing some people to delay vehicle purchases, but “we don’t believe it’s causing a drastic shift from big SUVs to mid-size cars.”
“We see gas prices having to move past $3 (a gallon) to have a more significant impact on consumer tastes,” Martilotti reportedly said.
