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Hybrid interest grows when gas price rises

Car shoppers are looking at hybrids when gasoline prices rise, but sustaining that interest appears to require sustained high prices for gas.
/ Source: The Associated Press

Online requests for large sport-utility vehicles that receive less than 20 miles per gallon were down 20 percent January through April, while requests for pickup trucks fell 21 percent, according to data collected from about 1 million shoppers using Autobytel Inc., an online car-buying referral site.

Meanwhile, requests for cars averaging more than 25 mpg have surged 33 percent. Purchasing interest in Toyota’s hybrid offering, the Prius, posted a 73 percent increase, while interest shot up 37 percent for the Honda Civic and 33 percent for the Mini Cooper.

“It’s the first time in recent memory we’ve seen such a strong shift all pointing in one direction,” said Brian Chee, Autobytel’s Web site editor. In fact, since the data also showed greater interest in smaller sedans and SUVs, buyers appear to be interested in “shopping down in size or up in fuel economy,” he said.

Incentives help SUVs
But whether those initial queries translate into lower sales for SUVs and light trucks remains to be seen since a slew of factors — such as incentives — can change consumers’ minds by the time they get to the final sale. Last month, U.S. auto sales rebounded, helped in part by higher incentives on SUVs.

One indication of changing consumer preferences is reflected in the type of SUVs drivers are buying. Although the sales mix of light trucks and cars hasn’t changed significantly, sales of crossover SUVs are one of the fastest-growing segments, said Paul Taylor, chief economist for the National Automobile Dealers Association.

Sales of these vehicles posted year-over-year gains of 23.4 percent in May, compared with a 1.2 percent sales decline for truck-based SUVs over the same period, he noted.

Better gas mileage might be one reason why drivers are buying more crossover vehicles, but it’s probably not the only one.

More buyers today want car-like characteristics — better gas mileage, vehicle maneuverability and comfort — along with the four-wheel drive of truck-based SUVs.

Meanwhile, sales of truck-based SUVs have been largely flat for the past three years at just under 3 million units a year, Taylor noted.

Gas price still low on buying factors
And while prices at the pump are hitting more than $2 a gallon across most of the United States, it would take a sustained rise in prices for at least three to six months at those levels or higher before consumers would start changing their buying patterns, said Art Spinella, president of CNW Marketing Research Inc. in Bandon, Ore.

The first change they’re likely to make — if gas prices remain high — is to choose more fuel-efficient engines.

For example, in the two years after 1997 — the last time gas prices jumped by about 30 percent as they had recently — about 5 percent more consumers opted for a four-cylinder instead of a V6 engine compared with the two years before 1997, Taylor noted.

To be sure, the price of gas is certainly a higher priority for many drivers.

Among a list of 56 factors that consumers consider in their decision to buy a car, the price of gas ranked 39 last month, up from 44 at the beginning of April, according to a monthly CNW survey.

In states that have seen sustained increases in gas prices, some drivers are changing their buying patterns.

$3 gas would be 'absolute mayhem'
At the Honda World dealership in Westminster, Calif., the state’s high gas prices and manufacturer incentives helped boost last month’s sales levels over year-ago results.

“We’re seeing an increase in sales as a result of people converting over from SUVs,” said Martha Hanson, a sales consultant at the Honda franchise.

If gas remained at $2.25 a gallon, for example, most consumers would postpone a vehicle purchase; at $2.50 a gallon, many would consider a more fuel-efficient vehicle for their next purchase, according to CNW polls.

At $2.75 a gallon, consumers would start to trade in their vehicle for one with better fuel economy. And at $3 a gallon, it would be “absolute mayhem,” Spinella said.

Yet most consumers today are likely to postpone their purchases until they find a compelling reason to jump into the market, such as a new model introduction or hefty incentives, he added.