Gas Prices: Small Impact On Auto Sales Gas Prices: Small Impact on Auto Sales

SPRING HILL - It's the housing industry, not so much gas prices.

A couple of auto dealers conceded that high gas prices have hurt the local sport utility market. As far as truck sales, the lack of residential construction is what has impacted dealerships the most.

At least two local auto retailers have seen their pickup truck sales drop by more than 10 percent in the last year.

"There's no question gas prices have impacted our SUV business, but it's been the lack of construction that has affected the sale of pickup trucks -0 more than gas," said Mark Flammer, owner of Flammer Ford in Spring Hill.

Hernando County has the third highest unemployment rate in the state, largely because of the slowing housing market. Hundreds of builders, framers, cabinet makers and brick masons are out of work and cannot afford new loading vehicles.

"Hernando County is known for being a bedroom community, and the construction industry has basically tanked," said Brad Kamp, an economist at the University of South Florida. "People aren't buying trucks, and it isn't because gas is too expensive. People just aren't buying them. They don't have jobs."

The sales of SUVs are mixed among local businesses. Rick Matthews Buick Pontiac GMC has seen little or no difference. The same goes for Register Chevrolet.

Those dealerships, along with Flammer Ford, have been in business in Hernando County for a combined 108 years. All of them have a significant number of repeat and referral customers, which makes them more impervious to the downward trends in the automotive business.

Hernando Suzuki, which opened a year ago, is not as fortunate. There are hardly any SUVs on display in the showroom or sales lot.

Gas prices have everything to do with the slowing sales at Hernando County's newest major auto dealer, but there has been a noticeable rise in the number of sedans and hatchbacks sold.

"The majority of our sales are fuel-efficient cars," said manager Mike Squillace. "It's all about the gas mileage right now."

The stickers on Hernando Suzuki automobiles show not only the number of miles per gallon (city and highway), but also the estimated annual fuel cost. The latter number is based on 15,000 miles at $2.80 per gallon, well short of the current average price for gas in Florida ($3.38).

The four-door Suzuki SX4 is the most fuel-efficient car on the lot and, not coincidentally, one of the highest sellers. Squillace compared it to the Toyota Corolla. It gets 31 miles to the gallon on the highway and 23 miles per gallon in the city. That translates to about $1,600 per year in gas.

Major automakers suffering losses, local dealers not so much

The three major U.S. auto companies have suffered steep drops in sales during the past two years and many have pointed to their decision to produce more large vehicles as the major reason.

Fuel costs have skyrocketed to record levels and auto executives have lamented how those prices have affected their bottom lines.

General Motors regrets not producing a hybrid vehicle. Ford is selling its ownership rights to Jaguar and Range Rover. Chrysler is undergoing an upheaval among its top executive ranks, perhaps because of disputes over its midsized car division.

Despite the gloomy signals from Michigan, local dealerships of American-made cars are not suffering much. People are still buying sport utility vehicles at some businesses while fuel-efficient sedans are on the rise everywhere, dealers have said.

"We're still selling our SUVs," said Rick Matthews, owner of Rick Matthews Buick, Pontiac, GMC in Brooksville. "That shocks me because gas is so high right now. But if people can afford them, they can afford the gas."

Matthews' business has slipped in the last year, mainly because of a drop in pickup truck sales.

"I'm ready for all this to be over, let me tell you," he said.

Tom Wiley, general manager at Register Chevrolet, also has not seen any major change in SUV sales, nor has he noticed an increase in four-door sedans compared to any other year.

He claims profits increased by 4 percent in 2007 compared to 2006.

"We're not seeing a big run on fuel-efficient vehicles or small vehicles," he said. "People are just cutting back on their driving."

Whenever there is a drop in auto sales, it might have more to do with credit issues rather than gas.

"It's not the oil prices that are giving (the industry) grief," Kamp said. "It's the credit market that is really hurting them."

"We're constantly reading about the credit crunch," added Flammer. "More and more people aren't qualifying for a credit loan."

Hybrids more for the city dweller

General Motors may regret not making a hybrid, but it makes no difference to Wiley, who said there is virtually no local demand for it.

The same goes for Flammer, who orders a single Ford Escape per year.

"Hybrids are mostly sold in urban areas -- New York, Boston," he said. "It's made for city driving. They're more fluff than stuff. Plus, they're more expensive to purchase."

Customers are more satisfied with an affordable small car -- like the Focus, which famously gets up to 38 miles to the gallon in the city, according to mpgomatic.com.

"When we order cars, we're ordering more fuel-efficient cars," Flammer said.

The most famous hybrid on the market is the Toyota Prius, which gets about 48 city miles to the gallon.

General Motors decided years ago against manufacturing its own hybrid to square off against the Prius, but vice chairman Bob Lutz recently announced during the New York Auto Show that was a "mistake."

He said the company had the same technological capability as Toyota to come out with a hybrid at the same time. Not knowing how the public would react, the company decided to wait.

"I think the whole company has learned when you step out and do bold things, you win and when you're cautious and let other people do the bold things, you lose," he told a room full of Chevrolet customers.

Not everyone understands why Lutz was fretting so much about taking a pass on the hybrid market.

The difference in gas mileage between a midsized sedan and a hybrid in rural areas and highways is little. In fact, the Prius actually gets fewer miles per gallon (45) on the highway than it does in the city, according to www.fueleconomy.gov.

There also is the issue of price.

"Hybrids just cost too much money to start off," said Squillace of Hernando Suzuki, which has no hybrids on the lot. "That extra money would just pay for a lot more gas."

On average, a hybrid costs $3,000 to $6,000 more than a standard sedan. That could be worth more than three-and-a-half years of gas for someone who purchased a Suzuki SX4 -- based on its annual fuel cost estimate.

Kamp said hybrids are considered "luxury goods" and are mostly for wealthier customers who live in the city.

More than likely, hybrids are more plentiful in areas such as South Tampa, downtown St. Petersburg and Sarasota, he said.

Flammer admits to seeing changes in his SUV sales, but does not think record high gas prices are going to put him out of business anytime soon.

"Gas prices matter to people who use gas more regularly -- truckers, shrimp boaters, the airline industry," he said. "What's hurting everybody now is the economy ... I'd rather see the economy turn around."