Fuel efficiency not a top factor for area car buyers

by The City Wire staff ([email protected]) 107 views 

A recent report by an auto industry organization says that fuel efficiency standards in new cars are at their highest numbers in years, but that is not necessarily translating into a change in local consumer preference for new car sales.

According to a report released today (Aug. 5) by WardsAuto, 2012 models reached an average fuel efficiency of 24 miles per gallon, the highest ever previously reported, driven in part by new technologies and consumer buying standards, the company said in a press release.

But Larry Throckmorton, new car sales manager at Toyota of Northwest Arkansas in Rogers, said fuel efficiency only drives car sales at certain times for his dealership.

"When gas prices rise for whatever reason, if they peak close to $4 per gallon, the trucks and SUVs go into a standstill and then we go into a mad dash for the hybrids," he said. "When prices come back down, people go back to the SUVs again. It's been a roller coaster the last couple of years."

Throckmorton characterized the ups and downs as cyclical, which has reflected the U.S. gasoline market during the last decade, according to the U.S. Energy Information Administration. The agency reported that a price for a gallon of regular unleaded was $3.49/gallon today, versus $3.61/gallon in 2012. In 2010, the price was only $2.78/gallon, though the price during 2008 was $3.24/gallon.

Bradford Randall, general manager of Randall Ford in Fort Smith, said while gas prices may influence sales of new fuel efficient vehicles in Northwest Arkansas, it is not something he has seen in the Fort Smith market.

"On the fuel efficiency side of it, I'm not sure that that's the main motivation for vehicles right now. We thought that hybrids and electrics would take off more in the area, but they just haven't. In Northwest Arkansas and Central Arkansas, they are more likely to push hybrid, but for this area we haven't seen fuel efficiency as the driving force."

In Fort Smith, the biggest driver, Randall said, has been aging vehicles.

"The average age of vehicles (being traded in) is 11.4 years. That's been the big driver."

But he said industry watchers should not be fooled by the number of people moving from an older vehicle to a newer one. It has not translated into the sale of more new cars.

"Used cars are huge right now. People can get them in good condition with low miles for a fraction of (the cost of) new vehicles. Now the warrantees aren't as good as new vehicles, but they are in it for the price now. Used vehicles are the way to go right now. That's primarily what's selling,” Randall explained.

Sales of used cars have helped drive Randall Ford to its strongest sales for the first seven months of the year since 2007, he said. The rise in customer traffic that has pushed the company to the best sales numbers in years did not really begin until April, Randall added.

And while hybrid and electric vehicles have been weak sellers for Randall, he did say non-hybrid fuel efficient vehicles are doing remarkably well on the used car lot.

"Small fuel efficient vehicles don't stay on our lot any time at all. Small trucks, like the Ranger or Chevy Colorado, just move really quickly."

In order to keep up with demand, Randall has started to explore new ways to to obtain used cars and trucks in addition to the traditional methods the company has depended on for decades.

"For acquisition, we are getting about 20% of our vehicles from auctions. The rest come from people selling their cars in the paper, Craigslist and new vehicle trades. But it's still a challenge to get some new vehicles. And there's still some bad vehicles (on the road that are leftover) from Hurricane Sandy."

In order to keep damaged vehicles out of the hands of his customers, Randall said each car undergoes a thorough inspection and a CarFax report is obtained. Anything that has a red flag, he said, keeps the car from being acquired and then re-sold to his customers.

If there's been one surprise for Randall, it is that sales of regular-sized trucks have continued to hold steady, even with the uptick in sales of used, fuel efficient vehicles.

"The gas guzzlers are staying (on the lot longer) than anything, like Hummers. But not trucks. There is still a great demand for trucks."

Throckmorton said the reason truck sales have continued to stay high was because of what trucks can provide consumers.

"Trucks serve more of a purpose than fuel efficiency. If you can't afford a truck or that is a major concern, then buy something else. But we as Americans want a big vehicle and we'll buy it and pay for extra gas. We all want something that is more fuel efficient. And it will happen in time. But think of it this way – a gallon of gas is still cheaper than a gallon of water," he said. "You go into the Quick Mart and a small 16 ounce bottle of water is a dollar. So you buy two one liter bottles of water, you're spending $4."