According to a report in The New York Times Monday, auto sales are down by more than a million compared to 2007’s 16.2 million cars sold. Auto lenders are less likely to lend to customers with less-than-stellar credit, and home equity loans, the funding source for one in nine auto sales is no longer a sure thing, the Times reports.
And even though lenders are having increasing difficulty in securing the funding for loans, auto dealers, facing weaker profits, are looking to offer incentives to move more vehicles off the lot.
So you don’t have to put your SUV in the garage for the summer driving season after all. Automaker Chrysler is giving a customer incentive for some cars in its fleet: if you buy, you get locked in to $2.99/gallon gas for the next three years!
If this were 1998, when a barrel of oil sold for less than an Old Navy polar fleece, that would be a joke. But nowadays, with the national average for a gallon of gas pushing perilously close to $4, that’s a steal for that sweet, sweet gas.
With conventional wisdom now saying that $5-per-gallon gas is a likely scenario by Labor Day 2008, it’s almost a foregone conclusion that other car-related expenses will rise with it. If you factor in all of the residual effects of the increases, which include higher prices for car rentals, tire service, oil changes, and other maintenance and repairs, it could be high time to change those driving habits, if possible.
Here’s the problem: in locking in its $2.99 offer, Chrysler is offering a tacit acknowledgement that gas prices are unlikely to go below that amount any time soon. Chrysler knows that it will have to address its mounting fuel-related problems at some point in the near future.
But as consumers, we’re not really there yet, so it’s no surprise that Chrysler, in its infinite wisdom, is subsidizing consumer gas costs to sell cars. Ingenious. And guess what? It’s working! Sales for Chrysler in May are up 15 percent from April. The deal was so popular that Chrysler has extended the offer for one full month.
Remember, Chrysler is the manufacturer of Jeep — a gas-guzzler in its own right — so Chrysler knows that its consumer base is probably not going into the car-buying process with fuel efficiency in mind.
My new favorite Web site, GasBuddy.com gives people who need to drive a look at where the cheapest gas is. But in doing so, it also gives tips as to how to reduce driving-related expenses. It should come as no surprise that we, as drivers should drive slower, buy fuel-efficient vehicles, or find alternate means to work.
That said, if fewer people are buying cars because of residual effects of the housing crisis, all the cheap gas in the world won’t move more cars off the lot. Someday, the auto manufacturers will have to understand that.