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Choices Abound

April 2, 2012

So what did you pay for gas last?  Coming over the mountains yesterday, I filled up in Bend at $4.02/gallon (with my discount), and I watched the indicator drop as I drove the 180 miles home.  You’ll note that I didn’t stop myself from doing something I wanted to do (we were sponsoring a fundraising event), though the impact to the budget of gas is definately changing other spending we do at the Fister household.  But see, that’s my choice.

And speaking of choice on cars and fuel efficiency… apparently, I’m not the only one making choices these days.

General Motors says that in March they sold more than a hundred thousand vehicles with a highway fuel economy of more than thirty miles per gallon—the most ever.

“GM’s strategic investments in four-cylinder and turbocharged engines, advanced transmissions and vehicle electrification have been very well timed,” said Mark Reuss, president of GM North America.

Well, congratulations, GM.  They were saying this morning that this was a record for 30MPG cars in a month.  Today, 40% of GM’s mix is in these types of cars  It’s not just GM, according to the Chrysler guys as well:

“We’re seeing a lot of consumers trading in their vehicles, not necessarily for small and compact vehicles—which is certainly occurring, too, but for just vehicles within their same segments that are just more fuel efficient than they were say, five years ago.”

Ah, and that’s the point.  I’m sure you’ll see a bunch of articles about how GM is back, and there’s a huge need for fuel efficiency.  Here’s some news: large truck sales are up from the last couple years.  People aren’t rushing wholesale to something new.  In fact, what’s notably absent from the GM crowing is any mention of Chevy Volt sales.  So don’t think this is a rush.

“We don’t see hysteria,” said truecar.com’s Jesse Toprak.  “We don’t find the owners of Escalades, parking their cars on the side of the road, in a panic, going to buy a Prius.”

In my business, we occasionally see what we call an “accelerated refresh” around a particular initiative.  Customers who would not normally buy decide to accelerate a purchase for a sound business reason.  I think this is a fine example of an accelerated refresh event in the automotive industry around a pretty sound economic decision.  Even a 5% growth in gas mileage could mean a month of Starbucks for someone on a budget, and that might swing a purchase.  Of course, all the incentives auto-makers are handing out probably help, and we’ll have to see if the increased sales in a low-margin area actually do anything to the bottom lines of the auto makers.

But here’s a great example of people using choices they have to dictate the future of the market.  I’ll be interested to see what this does in the long term, especially if gas prices stay relatively high for the rest of the year.

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