Survey Finds Surging Gas Prices Will Spur Small-Car Sales

This may be another summer of rising small-car sales. Nine out of 10 new-car shoppers foresee a spike in gas prices in the coming months, and two-thirds say it will influence the car they buy, according to Kelley Blue Book’s recent Market Intelligence Study.

KBB polled 753 prospective car buyers in the second half of May, and 87% predicted steep increases in gas prices, up from 66% in April. Coupled with the new Cash for Clunkers legislation, which should soon become law, sales of fuel-efficient vehicles and smaller engine options will likely see a boost.

Last summer, when gas prices shot up to more than $4 a gallon, car sales accounted for 57% of the market, but things fell back to the traditional 50-50 split with thirstier trucks and SUVs when fuel costs dropped, according to IHS Global Insight. Right now, cars account for 52.7% of the market, up from 51.9% in March.

Even if prices don’t hit summer ’08 levels (and let’s hope they don’t for the economy’s sake), three-fourths of those surveyed said that gas prices would lead them to change their spending habits. About 60% admitted that higher gas prices have either changed their minds about a purchase or led them to look at vehicles they never would have considered before.

Right now, the national average for a gallon of gas is hovering just below $2.67, up from $2.30 a month ago, according to AAA.

Survey: Sharply Rising Gas Prices May Accelerate Sales of Smaller Vehicles (Detroit News)

Comments

High gas prices would definitely influence my decision to buy a smaller car. I prefer mid-size but if gas continues into the 4.00 mark which is very possible (if not now, perhaps in a few years) then small would be the way to go for me.

That survey doesn't suggest that small car sales will be booming. It suggests that people will be considering fuel economy when making their next purchase. If I currently drive a Tahoe I am unlikely to buy a Fit but I might buy an Equinox or Highlander.

What goober decided they needed a survey to validate this?????? Who'd he/she/they sell it too and for how much???? I am DEFINITELY in the wrong business.

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Hey MPG50,
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PS Tell Billy Mays and the Shamwow guy I said Hi!

60% of the cars that are currently donated to charity will be eligible for voucher under the cash for clunkers program. Since the tax deduction for donating a car is only $500 or what the car sells for, charities won't be able to compete. A better idea is to just go back to allowing the donor to claim the book value for their car donation. This way all vehicles are eligible, the government doesn't have to spend $4 million on vouchers and administer a program with rules which are not enforceable! Since many of the cars that are donated are recycled there is an environmental benefit as well!