Thursday, December 30, 2010

Car dealers prepare for post-QE2 world

Automotive News reports:
As gasoline prices rise, some analysts predict a drop in SUV sales and trade-in values at dealerships...

Crude oil reached $91 a barrel on the New York Mercantile Exchange on Monday, causing nationwide pump prices to increase 7 cents a gallon to an average of $3.05. That is up nearly 45 cents from a year ago. Diesel prices also have risen, reaching $3.29 a gallon, more than 56 cents a gallon higher than last year.

Alec Gutierrez, lead analyst for vehicle evaluation at Kelley Blue Book, said sales of SUVs have only fallen about 1 percent since the last major gasoline price spike in spring of 2008.

He said he doesn't expect SUV sales to drop dramatically unless prices reach $3.50 to $4 per gallon, but even then, the rush to offload larger vehicles shouldn't be as pronounced as in spring of 2008.

“If you see a 20-to-30 cent price increase per gallon over the course of a couple weeks then of course people are going to panic,” he said, “but if it increases steadily over time that gives the market a chance to react rationally.”

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