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Gas Prices Not Impacting Sales Yet, CNW Reports

March 22, 2012

If the first 20 days are any indication, vehicle sales could increase 8 percent this month from a year ago to 1.35 million units, CNW Research reported today. The Bandon, Ore.-based firm said sales could even realize a 14.9 million True Delivery Rate.

Floor traffic showed a significant increase in the opening days of the month, increasing by 9.3 percent in the first 10 days and 13.1 percent in the second 10. Through yesterday, floor traffic was up 11 percent, the firm added.

“Closing ratios also were up, but only up by a modest 0.9 percent,” wrote Art Spinella in his firm’s monthly newsletter. “Combined, this is a clear indicator more consumers are looking at a new vehicle, although not quite ready to sign. The positive is that shoppers today will be back in a month or two to make an actual purchase.”

 Looking at trade-in data, the firm said its clear consumers are feeling the increase in gas prices, but price hike isn’t forcing everyone off the sidelines. Of those with a larger passenger car, Spinella noted, 82 percent traded for another vehicle in the same segment in the opening months of 2012, which isn’t significantly different from 2007.

“More than 90 percent are stuck with in the full-size pickup segment, about 2.7 percent fewer than in 2007,” Spinella wrote. And when asked about their primary motivation for selecting a vehicle and trading in their current model, fuel economy was listed among the top three reasons in better than 80 percent of the cases for every segment except sports cars.

“Fuel economy sells, but many consumers are not willing or able to give up on the type of vehicle already in the family fleet,” Spinella noted. “Downsizing is now a function of practicality or driving needs rather than an attempt to boost fuel economy. In fact, of all the respondents, only 7 percent of large car owners traded for a smaller model — barely more than in 2007.”

Spinella does maintain that the gas price threshold that could change all of that that is $4.75 per gallon. According to the Energy Information Administration, the national average stood at $3.87 per gallon on Monday.

“That day will come and the result may be a boom in small car sales,” wrote Spinella. “How soon can it happen? As quickly as perhaps the end of summer.”

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