Oil Prices and Small Car Sales
Thursday July 17, 2008
With 2008's high oil prices, small cars are just flying off dealer's lots:
We do not know if this trend will continue - if oil prices continue their big downward slide of over $10.00 in 2 days then I would bet they will not.
Used economy cars that once could be difficult for dealers to move -- the Ford Focus and Chevrolet Aveo, for instance -- are now flying off the lots, and prices are rising. In May and June, the 10 used cars with the fastest-rising prices, according to J.D. Power & Associates, included the Hyundai Elantra, up almost 9% from the year-earlier period, and the Kia Spectra, up nearly 8%. A few years ago, the list was dominated by larger, more luxurious cars like the Lexus LS Series. (h/t: Greg Mankiw)Garth Brazelton once asked me how would a gas tax reduce consumption and this is one of the ways. Though, admittedly, Garth's proposal to strength CAFE standards would be more direct on this front.
We do not know if this trend will continue - if oil prices continue their big downward slide of over $10.00 in 2 days then I would bet they will not.
Comments
Mike, I just posted on this topic as well. And I agree with both you and Mankiw that the cross-price effect of a gas price increase is undeniable. Though, in my post, I make the point that the own-price effects (the change in actual gasoline/energy consumption still seems minimal at best. And as you suggest, even these cross-price effects may be somewhat temporary.
It is about time that the Hyundai Elantra’s value should increase, both used and new. I bought a new one in 2005 and have driven it under all conditions. There has been one repair item: The switch for the electric mirrors—not bad for 31,000 miles.
My mileage? My regular run from Toledo to Ann Arbor is just under 38 MPG at a steady 60 MPH, carefully measured. (This is a 5-speed manual.) If I trade this in now, I will demand top dollar.