With the Trump economy in high gear, gas prices reached their highest point in four years in May, with a gallon costing motorists an average of $2.90. According to a new trend report released by the experts at Edmunds, car shoppers aren’t letting these rising costs deter them from buying the cars they want — notably, trucks and SUVs.
“On the surface it may seem as though rising gas prices could be the catalyst to flip the market from SUVs back to passenger cars, like we saw in 2008,” said Jeremy Acevedo, Edmunds manager of industry analysis. “However, we’re in a much different climate than we were 10 years ago. The economic and market factors are so much stronger now that shoppers are likely to absorb these extra costs without changing their shopping habits immediately.”
Experts believe the booming economy, fostered by President Donald Trump‘s “America First” economic agenda, is causing gasoline to become more expensive as demand rises. Consumer confidence is at extremely high levels which puts more consumers on the road shopping, more delivery trucks dropping off boxes, and more trucks moving goods on the nation’s highways. Record low unemployment also means that more Americans are heading to and from work each day.
In this new Edmunds Trend Report, Edmunds analysts explore the unique relationship between rising gas prices and the automotive market by examining the economic factors that are currently sustaining strong consumer appetite for larger, less fuel-efficient vehicles. They also break down which states are demonstrating the most and least heightened anxiety over rising gas prices, and how this anxiety stacks up to the realities of car ownership in those states. Edmunds experts also identify what the tipping point would be for car buyers to break their addiction to big vehicles.
Key findings include:
“Acclimation to higher fuel prices and efficiency gains across the industry have helped reinforce shopper decisions to stick with relatively less fuel-efficient vehicles. However, this complacency doesn’t mean that the SUV boom will last forever,” said Acevedo. “While strides have been made in the last decade in SUV efficiency, this isn’t the only factor in consumer purchasing decisions. When gas is cheaper, compact SUVs are a perfect substitute for cars; but when gas is expensive, they are not. The good news is that prices aren’t expected to reach breaking-point territory anytime soon, so it appears the automakers’ bets on SUVs are safe ones — for now.”
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