High gas prices will slow car sales, not stop them

Automakers are ready for surging gas prices with more fuel-efficient vehicles. Only if gas prices move above $5 a gallon could automakers face a big slowdown. 

Stan Carroll/The DeSoto Appeal/AP/File
Members of Landers Chrysler Dodge Jeep's sales staff in Southaven, Miss., perform a walk-a-round on new cars earlier this month. Surging gas prices may slow auto sales, but it won't bring them to a full stop unless they climb dramatically higher.

With gas prices surging to a record high for this time of year ($3.57/gallon national average compared to $3.17/gallon a year ago) the question now is not whether gas will hit $4.50 or $5.00 a gallon.

It's a pretty safe bet we'll hit those prices this Summer. Heck, parts of California are already seeing $5/gal.

The automakers knew this day was coming. Maybe that's why you won't find many of them freaking out over surging gas prices.

 Unlike the last time gas prices surged to record highs (July 2008 the natl. avg. hit $4.11/gal) the auto industry has far more fuel efficient cars and trucks sitting in showrooms. Look at what has changed in the last 4 years.

 —The avg. fuel economy of the vehicles sold in January hit a record high at 23 MPG.

 In July of '08 the avg. fuel economy was 21.3 MPG.

 —The number of cars getting 40 MPG has soared in the last 4 years

 Right now there are 17 models that deliver at least 40 MPG. Four years ago, there were far fewer models attaining that level of fuel efficiency.

—Fuel efficient 4 and 6 cylinder engines are more available and are actually in demand. More than half of the Ford F-Series trucks sold last year left the lot with 6 cylinder engines; the most since 1985.

Is there a point where gas becomes so expensive and so onerous that it forces a large chunk of would be car and truck buyers to put off making a purchase? You bet.

A new survey by CNW marketing research found 83 percent of those surveyed say they would postpone buying a new vehicle if gas hits $4.50 a gallon.

If the average price of gas surges to $5.00 or $5.50, the real and psychological impact could be so great many buyers might stay on the sidelines.

But for now, my gut says the automakers continue posting strong sales, even with prices at the pump moving higher.

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