Will The Price Of Fuel-Efficient Vehicles Skyrocket This Month?

March 8, 2011
I just got off the phone with a good friend. He and I were Internet Managers for a major car dealer in 2008, the last time gas prices shot through the roof as they’re doing now. We saw first-hand how high gas prices affected the vehicle choices our customers made. When gas prices shot up, sales of trucks, large SUVs, and big sedans dropped like a rock. Small economy cars were in short supply because everyone wanted one. And anything called “hybrid” sold for a hefty premium.

Until recently, gas prices have risen slowly, and that’s allowed the public to adjust to the new reality of higher gas prices without panic. This passive period may be coming to an end. The retail price of gas is now high enough that the attitude of car buyers is being affected. I’m beginning to see laid-back consumers become nervous about holding onto large SUVs or gas-guzzling sedans, and quickly shopping around for small, fuel-efficient sub-compacts and hybrids.

The price at the pump is scaring consumers into taking action. What was a straggler or two taking pre-emptive action on gas prices is quickly becoming a thundering herd of consumer-based reactivity.

History repeats itself?

As I’m ending the telephone call with my friend, I can’t help but make a list in my head of the people I need to talk to. I need to tell my other friends who have recently expressed interest in getting a vehicle with better gas mileage that they should act quickly—very quickly.

Although he no longer works at the same dealership, my industry-insider friend is Internet Manager for a major import dealership, similar to the one we used to work for. He reminded me that in 2008, we had been selling fuel-efficient vehicles at invoice or below. When gas prices spiked, they went for the Manufacturer’s Suggest Retail Price (MSRP) or higher. This amounted to a price jump of between $1,000 and $2,000. Hybrids were often selling for even more.

Right now...

During our conversation, my friend told me that anyone wanting to get in on current low prices for fuel-efficient vehicles should buy now. He said he was still selling his most fuel-efficient vehicles for invoice or less, but that was probably going to change soon. I asked him how soon. Did he mean prices would increase in the next few days, or the next few weeks?

“Prices could start to go up in a matter of days,” he said.

I asked how big a price increase was coming. He said that would depend on how high the price of gas goes. He said new car prices could reflect the price increases of 2008.

“You’re telling me that prices on your smallest, fuel-efficient vehicles could go up one to two thousand dollars, with that trend beginning in a matter of days?”

My friend emphatically said, “Yes!”

I have to go now. I have to call all my other friends who plan on buying a fuel-efficient vehicle in the next few weeks or months. I need to tell them that if they’re serious, they should do it NOW—just in case.

Good luck.

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