GASOLINE PRICES
David Zalubowski  /  AP
Gas prices are up, but Hummer sales in April were up 231 percent from year-ago levels, GM reported.
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updated 5/2/2006 5:14:33 PM ET 2006-05-02T21:14:33

Larry Tynes sold five Hummers last weekend.

While crude oil prices reach all time highs, the Hunt Valley car salesman said he doesn't think his customers are concerned about the extra money spent at the pump. Industry experts agree.

The car dealership sells 45 new and 15 used Hummers each month, Tynes said. It has 30 used Hummers in stock right now. Anderson Hummer trades four to five Hummers a month, Tynes said. Customers usually trade them in on newer ones, he added.

"Sales are just fine because the people who are buying them aren't concerned about gas prices," he said. Buyers are wealthy people ranging from company CEOs to well-paid laborers with expendable income, he said.

National Hummer sales nearly tripled from 2,220 sales in March 2005 to 6,125 in March 2006, according to research by Autodata Corp., a Woodcliff Lake, N.J., company that tracks automotive statistics. Sales increased each month this year, the data showed.

One out of every four vehicles purchased from January to March had an eight-cylinder engine, a study by J.D. Power and Associates, a global market research firm based in California, found. Six cylinder vehicles made up 41 percent of all new vehicles sold since August 2005, the study said. Most SUVs, trucks and sports cars have six- or eight- cylinder engines, while most sedans and compact cars run on four. The larger vehicles -- built for speed or towing -- use more fuel to support the bigger engines.

Gas prices have not made an impact on buying habits, the research group concluded. New car, sport utility vehicle and truck sales for the first three months of 2006 remained consistent with sales from July to September 2005.

Philip Donnelly, president of Orion Communications Inc. in Rockville, traded his Hummer H2 in last year. The former member of the mid-Atlantic chapter of the Hummer H2 Club said his trade was more about functionality than fuel economy -- but gas prices did factor into his decision.

"The first time I pressed on the accelerator, the instant miles per gallon went to zero," he said. Donnelly said he usually averaged 11 to 12 miles per gallon.

Both General Motors -- Hummer's parent company -- and the Ford Motor Co. reported losses last month. GM sales dropped 14 percent from March 2005 but the Hummer brand increased sales. GM reported stronger year over year sales for other large sport utility vehicles including the Cadillac Escalade, GMC Yukon and the Chevrolet Tahoe. The company credits the success to the 2006 redesigned versions of those vehicles.

"The most amazing thing is that fuel prices haven't affected SUV sales more," Phil Flynn, senior market analyst with Chicago-based Alaron Trading Corp. Flynn said the SUV fad has been weakening but "people aren't dumping their SUVs and buying hybrids." Instead he has seen a trend of consumers downgrading to small SUVs, he said.

"Even though we complain about gasoline we're not doing a lot to change our habits," Flynn drives an Infiniti FX, a medium sized SUV.

The Hummer Club, a nonprofit national trade group, has not been affected by fuel sales, President Linda North said. She uses three H1s on her ranch in Washington State. The group has 60 members in Maryland.

The H1 is the most expensive model. It has a turbo diesel engine with a recommended retail price starting at $130,000. H2s, a smaller gas-powered model, start at $54,000. And the H3, the smallest and what North called the most "gas friendly" model starts at $29,500. The H3 is touted as getting an estimated 20 mpg on the highway.

© 2007 Baltimore Business Journal

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