Posted on: Friday, March 19, 2004

Rising gas prices won't faze SUV buyers, survey finds

By David Kiley
USA Today

DETROIT — Near-record gasoline prices haven't hurt sales of the thirstiest SUVs, and a new survey found that two-thirds of consumers wouldn't buy more fuel-efficient vehicles even if prices passed $3 a gallon.

Through February, sales of sport utility vehicles were up 18 percent compared to the first two months a year ago, while overall auto sales were off 4 percent, according to Autodata.

Some of the thirstiest SUVs showed big gains. Among them: Chevrolet Tahoe, up 41 percent; Dodge Durango, up 21 percent; Cadillac Escalade, up 17 percent; Jeep Grand Cherokee, up 30 percent; Honda Pilot, up 22 percent; Lincoln Navigator, up 13 percent; Mercury Mountaineer, up 40 percent; and Toyota 4Runner, up 26 percent.

Those sales came even as gasoline prices have climbed more than 20 percent this year. Nationwide, a gallon of unleaded regular averaged $1.723, the motorists club AAA reported Wednesday. The record: $1.737 Aug. 30.

After adjusting for inflation, though, oil and gas prices are still well below what they were in the early 1980s, the Energy Department says.

"Gas prices are up, but it's nowhere near the fear and loathing of the 1970s and early 1980s," says George Pipas, sales analysis manager for Ford Motor. "It will take European prices of around $5 per gallon to really dampen SUV love."

Pipas and others in the industry say that consumers are conditioned to periodic spikes in fuel prices and that the desire for SUVs outweighs concern about the cost of filling them up.

A survey by CNW Marketing Research shows that about a third of consumers would consider eventually buying a more fuel-efficient vehicle if gas prices hit $3.25. Not until gas reached $3.75 would a third of those surveyed say they would immediately consider trading in for a more fuel-efficient vehicle.

At $2.25 a gallon, just 10 percent said they would consider eventually buying a more fuel-efficient car or truck, and virtually no one said they would immediately consider such a purchase.

Even in California, where unleaded regular gasoline averaged $2.152 yesterday, dealers say that while demand is high for the Toyota Prius gas-electric hybrid car, SUV buyers are barely flinching.

People who like SUVs aren't trading down to a minivan "for the sake of $15 or $16 per tankful," says Tom Collier, sales manager of Courtesy Chevrolet Center in San Diego.

An all-wheel-drive Chevrolet Venture minivan gets 20 miles per gallon; a four-wheel-drive Chevy Suburban SUV gets 15 mpg.