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Profile E-mail With gasoline prices surging across the nation in the wake of Hurricane K atrina's path of destruction in the Gulf of Mexico, the cost of running a car appears to be heading for what some auto experts say is a tipping point for American drivers. The price of gas is now well above $3 a gallon in some parts of the count ry, and the storm-related price surge comes on top of already record-hig h pump costs. But despite the persistent rise in gas prices this summer, US motorists continued to buy up gas-guzzling light trucks and SUVs a s the big US auto companies offered deep discount programs to whittle down swollen inventories. According to an unscientific poll of automotive industry experts, a sustained gasoline price above $3 is lik ely to push American car consumers away from buying large gas-guzzling S UVs and light trucks and toward smaller, more fuel-efficient SUVs and ca rs. the cost of gas will have to move above $3 and stay th ere for a few months for people to realize this is hitting their pocketb ook hard - that's where we'll see a shift in attitudes." American drivers have remained relatively unmoved by rising gas prices in recent years. In 2004, Hurricane Ivan tore through underwater oil pipel ines in the Gulf, cutting output from oil refineries and driving gasolin e prices above $2 a gallon. Yet consumers continued to buy gas-guzzlers, responding to Detroit's incentive programs.
Will gasoline prices influence your next car-buying decision? "With every major shift in gas prices over the last year we have not seen a major shift in consumer buying practices, but there's definitely a br eaking point where people will consider smaller vehicles, and $60 for a tank of gas is where we think people will sit up and take notice," Chung said.
Thursday's auto industry sales data for the month of Augus t appear to show gas prices are biting into SUV sales. The data show a s lowdown in vehicle sales - a drift due in small part to high gas prices, but also because of a series of heavily-publicized discount programs ov er the summer that thinned car dealer lots. General Motors, the first of the big three US automakers to let all cus tomers pay employee prices for its cars, reported a sharp decline in aut o sales, with new car and truck sales down 16 percent in August from the same month a year ago. Car sales declined 15 percent and truck sales we re off 17 percent. Ford and Chrysler reported only modest sales gains fo r August. Ford and GM have both extended their employee-pricing discount programs, which offer big discounts on trucks and SUVs, through Sept.
com, a Web site for classified advertising, says employee discounts have led to a glut of big, fuel-inefficient cars like SUVs. Nationwide, car dealership s are reporting a significant increase in customers trading in their SUV 's for smaller, more fuel-efficient SUVs and cars, he notes. "I've spoken to a number of auto dealers and they are saying people are c oming into their dealerships with large SUVs, like the Escalade or Yukon , and want to trade them in, but some of the dealerships are not bidding on those cars because they already have too many," he said. "They know they will hold those cars on their lots for a long time, and as gas pric es go up the value of those cars will go down - it's a risk to their inv entories." Yet Americans' love affair with SUVs remains intact, according to Brian C hee, an analyst with Autobytel, one of the most popular Web sites for ca r buyers. Chee says Autobytel's mid-year Consumer Choice report, which p rovides a snapshot of online car shoppers' vehicle choices during the fi rst half of 2005, shows a significant increase in the popularity of smal ler SUVs with decent gas mileage like the Toyota Highlander. "It's safe to say that buyers' choices are changing as result of fuel pri ces within in SUV segment," Chee said. even though gas prices are sky high, you can't stuff a fam ily of five into a compact car and go shopping for groceries. But cars w ith more space and fuel economy are definitely going to benefit from hig her fuel costs."
MSN Autos: Check gas prices in your area - Note: MSN Autos strives to cover as many gas stations as possible, but does not guarantee that eve ry gas station is listed or every local area is covered.
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