The Times West Virginian

December 22, 2008

Truck, SUV sales on the rise

By Jake Stump

CHARLESTON — Consumers have shifted gears to trucks and sport utility vehicles, a turnaround from the summer when $4-a-gallon gasoline prices cooled demand for boxy, fuel-gulping automobiles.

With gas prices under $2 for nearly a month, car buyers are veering away from smaller, fuel-efficient vehicles that became the rage earlier this year, local dealers are reporting.

Truck and SUV sales are on the rebound, they say, citing three contributing factors: The dip in gas prices, the winter season and the lingering deals and rebates on larger vehicles.

"People are looking at those cars a little more differently," said Ruth Lemmon, president of the West Virginia Automobile and Truck Dealers Association. "They buy vehicles based upon their need, particularly in our climate here. Once you have a couple of slick days, people start looking for a vehicle that can handle the weather here.

"The weather has so much influence. Some folks might have gotten rid of their SUVs last year and are now saying, 'Wait a minute. I need this.' "

Plummeting gas prices also have helped fuel interest in bigger vehicles. According to national data, truck sales accounted for 52 percent of all vehicles purchased in November, as gas prices declined. That marks a 3 percent increase from October, when gas prices averaged more than $3 a gallon.

The average gas price in West Virginia today was $1.78 a gallon, according to AAA.

Sales data indicate that most consumers go for fuel-efficient cars, such as hybrids, only when gas prices are sky-high.

When gas prices hit $4 a gallon in July, national sales dropped 73 percent for the Chevy Trailblazer, 65 percent for the Hummer H3 and 21 percent for the Ford F-Series.

But as gas gets cheaper, consumers swing back toward trucks.

In some parts of the country, full-sized Ford F-150s were in such high demand that dealers had to trade them across state lines.

Lemmon notes that deals on pickups and SUVs are so attractive to buyers that they're difficult to pass up for smaller cars.

"We're seeing rebates of $6,000, $8,000 and $10,000," she said. "That can buy you a lot of gasoline."

Several dealers are anxious to move their 2008 models off the lot so they can concentrate on the 2009 inventory, Lemmon added.

Steve Moses, president of Moses Ford, said he began noticing the rise in truck and SUV sales last month.

Over the duration of the gas price explosion, dealers like Moses offered a slew of incentives on the larger, slower-selling vehicles. That approach is now paying off.

"You pay what a Ford factory worker would pay and get substantial, thousand-dollar rebates," Moses said.

Still, Moses called it an "unsettling year" for the auto industry and said sales, though rising among trucks and SUVs, aren't what they should be.

Roy Sexton, general manager at Turnpike Chevy, said dealers should expect low truck inventories in the future due to increased demand and production cuts.

Sexton also has reported a rise in truck sales at Turnpike Chevy, and he foresees a change in another six months, resulting in limited selections and scarce deals.

"Cars are going to be plentiful, because we're going to see a cutback on truck production," Sexton said. "As production and inventories get cut back, the big deals won't be there. If people aren't buying now, they're missing the boat."

Sexton said it was critical that consumers buy American cars to support the falling industry. He also noted that banks and financial institutions have made it difficult for some folks to get loans for car purchases these days.

"It's amazing how tight the lenders have gotten," he said. "It's a challenge. You (a borrower) were a good guy six months ago. Now you're not a good guy."

The big three automakers in the United States - Chrysler, General Motors and Ford - have been pleading with Congress for a financial bailout for their struggling industry. On Wednesday, Chrysler announced it was closing all its North American manufacturing plants for at least a month to help the company weather the recession.

U.S. sales have dropped to their slowest rate in 26 years. GM and Ford are also taking cost-cutting measures by halting construction of plants and temporarily shutting down a limited number of plants.