Cheaper gas may fuel truck and SUV sales

But some warn effect will be mild

October 3, 2006

Email this Print this BY SARAH A. WEBSTER

FREE PRESS BUSINESS WRITER




Country music star Toby Keith appears in a Ford truck ad. U.S. automakers are hoping that lower gas prices will spur sales of trucks and SUVs. (Ford)

The chief economist for the National Automobile Dealers Association, Paul Taylor, said gas prices have dropped below $2.30 a gallon in many areas of the country. A month ago, they were $2.85 a gallon, according to the U.S. Energy Department.

Gas averaged $2.18 a gallon in Michigan last week, according to AAA Michigan.

The decline "should help new car and truck sales," Taylor wrote to dealers and journalists. "Full-size pickup trucks and SUVs should see an uptick."

An increase in truck sales -- even a modest one -- could be a good sign for General Motors Corp., Ford Motor Co. and the Auburn Hills-based Chrysler Group, a division of DaimlerChrysler AG.

Trucks are more profitable than more fuel-efficient cars and still make up a disproportionate share of sales for U.S. automakers. Sales of light trucks, which include SUVs, pickups and minivans, make up 60% of sales for GM, 61% for Ford and 76% for Chrysler.

Auto manufacturers are to report their September sales results today, and experts predict that cars and trucks sold at a 16.6 million annual selling rate last month. That would be slightly better than the 16.52 million selling rate in September 2005, but not a great improvement, considering that sales last September were still considered damp after the employee-pricing sales craze.

And not all experts agree that truck sales will improve.

"Consumers continue to downsize out of SUVs," Peter Nesvold, an automotive analyst with Bear, Stearns & Co., wrote in a note to investors.

Jerry Seiner, a dealer known as the "GM Guy" in Salt Lake City, said truck sales are stabilizing but cars are still hot.

"There's a real trend toward cars," he said. "The Cobalt and Aveo are selling well."

But Joseph Amaturo, an auto analyst for Calyon Securities, told investors that the drop in gas prices "could have a marginally positive impact."

bubbahotep - 10/3/2006 3:33:26 PM

+1 Boost

Gas will have to stay low for longer than a few weeks for people to buy trucks again. How do I know. because I'm one of those waiting....

monkeyrun - 10/3/2006 4:22:03 PM

+1 Boost

Fool me once, shame on you.

Fool me twice ...

OBSERVER1984 - 10/3/2006 4:43:32 PM

+1 Boost

GAS is getting higher and higher. SUVs and Trucks will stay in the history soon or later!!!

chewy - 10/3/2006 11:47:13 PM

+1 Boost

That is why there needs to be a gas guzzler tax on pickups and SUvs (like there already is on cars with bad fuel economy, like 14/18 [typical SUV/pickup fuel economy]) BTW, I saw the Mercedes ML 63 AMG (the picture in this article) on the highway, without the badges and the 4 chrome exhaust tips you wouldn't be able to tell teh difference between the ML 63 AMG and the ML 350.

bubbahotep - 10/4/2006 12:17:55 PM

+1 Boost

Wouldn't be a problem if someone could make a truck that could get 20-25 mpg...