While Irish prices continue their upward spiral, in the US this week Rich Sopron, internet sales manager at the Larry Roesch Chevrolet dealership in Bensenville, Illinois, will scan his e-mails for signs of interest from prospective buyers of large sport utility vehicles (SUVs).
He is not holding out much hope. In the past few weeks, inquiries have slumped to zero. Before, he would receive an average of 10 inquiries a month for the vehicles. This week, a customer at Mr Sopron's dealership traded in a 14 miles-per-gallon Ford Expedition SUV for a Chevrolet Aveo, a tiny car produced by GM's Daewoo affiliate in South Korea. Miles per gallon: double that of the Expedition.
In a country where a bottle of mineral water has long cost more than a gallon of fuel, the surge in fuel prices is having some effect on US car-buying habits. This weekend, a gallon of petrol, though below highs of $2.40 in some states recently, remained stubbornly above $2.
Earlier this month, 38 per cent of consumers in a survey considered a benchmark for vehicle price comparisons in the US, said the high price of fuel was affecting customers' buying decisions.
But the change in buying patterns has been limited - so far - to the biggest gas-guzzlers on US highways: the largest SUVs that are accumulating on Mr Sopron's garage lot.
Below the largest SUVs comes a range of medium and small-sized SUVs, many of them smaller than some ordinary cars. Jim Padilla, Ford's chief operating officer, says: "I don't think we're seeing a dramatic impact on [overall vehicle] sales."
US car industry analysts say consumers who need the features offered by the largest SUVs - such as massive towing capacity - are still buying.
Last month, sales of trucks - a category that includes pick-ups as well as SUVs - rose 6.8 per cent from a year earlier, while ordinary car sales fell 3 per cent. Csaba Csere, editor-in-chief of Car & Driver magazine, says: "Everybody is complaining but in truth petrol prices are not at high enough levels to cause those major changes in consumer preferences."
Paul Ballew, executive director of market and industry analysis at General Motors, says: "The other thing that's important from previous cycles is that we're not experiencing gas shortages. The thing that drove the change [in buying patterns] last time was queues at gas stations, which had a much bigger impact than just the price."
But there are concerns within the industry about high inventory levels. In a recent report Merrill Lynch said the build-up was the largest in 13 years. The prospect of rising interest rates, and consequent perceptions of the beginning of the end of cheap vehicle leases, may also curb US auto sales.
Discomfort over fuel prices has prompted some change in how people use vehicles. Christine Feuell, SUV group marketing manager at Ford, says: "We've noticed that people are using car pools more, and taking shuttles to work." But she says Ford believes that petrol prices would have to hit $3 per gallon before there was any "wholesale" shift towards more fuel-efficient vehicles, such as ordinary cars or even hybrid petrol-electric vehicles.
While sales of hybrids are brisk, the segment still accounts for less than 1 per cent of the roughly 17m vehicles sold annually in the US.
- Financial Times Service
The Irish motor industry has called on the Government to shelve any plans for a carbon tax on fuel, given the growing uncertainty surrounding oil price rises on international markets.
The Society of the Irish Motor Industry (SIMI) said yesterday in a statement that the "Government should not be threatening to impose additional tax burdens on the motorist through a so called carbon energy tax". It said that in the last budget the Government imposed a tax increase of 5 cents per litre overnight. "Tax increases of this sort do not have any effect in reducing the amount of petrol used by the average motorist. As there is no fall off in consumption, this increased taxation is simply a crude revenue raising measure that adds to the hardship of consumers and fuels inflation".
The SIMI said its estimates put the taxation element on a litre of fuel charged at 1 at 62.11 cent per litre.