High fuel prices impacting sales of large vehicles

Rick Wagner • Jun 7, 2008 at 12:00 AM

KINGSPORT — As fuel prices remain near all-time highs, local automobile dealers are seeing some customers shift away from larger vehicles that have lower fuel economy.

It is evident in the expanded selection of new and late-model, large pickup trucks on some area car lots, as well as news last week that four car models outsold F-series Ford trucks in May. That was the F-series’ first toppling from the No. 1 slot in more than 15 years.

Ironically, the increased fuel prices have made diesel vehicles among the most sought after and least sought after, depending on the model and mileage.

But the bottom line, according to one used car sales manager at a Kingsport new car dealership, is common sense: in a time of gasoline at $3.809 a gallon or more and diesel at $4.549 or more, fuel-efficient vehicles are selling better than less-efficient ones. However, he said more than high fuel prices are at work.

“It’s always different in an election year,” said Matthew Dalton, used car sales manager for the Fairway Ford and Fairway Volkswagen dealership.

“A lot of people who have decided to buy a vehicle have put it on hold,” Dalton said. “They want to see who’s going to be president and how high gas goes.”

But for those who want, need and can afford to buy a larger pickup truck or sport-utility vehicle, Dalton said now is a prime time to buy.

Doug Alley, president and chief executive officer of Alley Chrysler, Dodge, Jeep and Saab, said vehicle sales in the region are not down as dramatically as elsewhere.

“The sales volume in this area is down some but not like in the markets that have major issues like foreclosures,” Alley said. “Clearly, with gas the price it is today, fuel mileage of the vehicle is a very important consideration.”

Alley said that the Dodge Caliber, Chrysler PT Cruiser, Dodge Avenger, Dodge Charger, Chrysler 300 and Dodge and Chrysler mini vans are popular because of their mileage and/or mileage and people-carry capacity. Dalton said Ford Focus, Fusion, and Taurus models are popular because of fuel economy.

Big trucks, SUVs passe?

Dalton said his lot has seen more trade-ins of the F150, F250 and F350 trucks. Many of the F250s and F350s are diesel powered. Fairway Ford also is well stocked with new Ford trucks.

May sales of F-series Ford trucks were down 30.6 percent, ranking the trucks fifth behind the Honda Civic — which is rated 29 mpg in combined city/highway driving, followed by Toyota Corolla, Toyota Camry and Honda Accord. Sales were off 42 percent for the Chevrolet Silverado, 37 percent for the Dodge Ram and 31.5 percent for the Toyota Tundra, according to a June 4 Detroit Free Press article.

The newspaper reported that the last time the F-series was outsold by a car was December 1992 when the Ford Taurus sedans were sold, according to Ford sales analyst George Pipas.

“We’ve had quite a few of them,” Tony Barger, general manager of Phil Bachman Honda, said of people trading or wanting to trade large diesel Ford trucks on Honda Civics or Accords. “The market on those vehicles is a little less desirable now.”

He said people are trading in trucks and SUVs on smaller cars, although he said the Honda Ridgeline truck is still selling relatively well because of its fuel mileage.

To spark truck sales, Ford is launching a redesigned F150 later this year and is considering a relaunch of the old F100 as a lighter, more fuel efficient truck.

Meanwhile, General Motors officials have announced they are considering selling the Hummer brand, will market an electric car and will close truck plants.

“You’re seeing the people that have their vehicles for enjoyment or status, who don’t need them or use them, trading them in,” Dalton of Fairway said.

He said one example is a customer who came in to trade a 2500 GMC Sierra for a Ford Focus.

However, for those who use and need them for work on a farm, construction site or for heavy towing and hauling, trading is not an option, even if filling up a diesel F250 can cost $130 or more.

“People still buy these because they have to have them,” Dalton said. “We have people still trading for trucks.” Some of the four-door F-series trucks and full-size competitors can seat six adults, making them an option for someone who wants to haul family but still haul building materials or other items in the bed.

The F-series diesels and other larger vehicles are not mileage rated by the Environmental Protection Agency, but dealers say they can get from about 16 to more than 20 miles per gallon, depending on usage and driving habits.

Diesel motors are inherently more efficient than gas ones, and historically diesel has been cheaper per gallon than gas.

“For anybody who doesn’t mind to pay a little extra in fuel, now’s the time to buy an SUV or large pickup,” Dalton said of both V-8 gas and V-8 diesels.

Up the road at the Dodge dealership, the head of the operation said larger Dodge trucks remain popular.

“We actually look for the used Dodge trucks with a diesel engine,” Alley said of taking the trucks in on trade, buying them at auctions or buying them from individuals.

He said the Dodge diesels, which can get more than 20 mpg, remain popular.

He said about 90 percent of the Dodge 2500 and 3500 Ram trucks have the 5.9-liter Cummins diesel, while more of the Ford F250s and F350s and Chevrolet and GMC 2500 and 3500 Sierras have gas engines.

Diesel Fords have gone from a 7.3-liter engine to a 6.0 liter and most recently a 6.2 liter, while General Motors uses the 6.6-liter Duramax.

Dalton of Fairway said what many buyers don’t realize is that the mileage for a gas V8 F150 is about the same as a Ford Ranger gas V6, even though the Ranger is smaller.

Fairway Volkswagen Sales Manager Carroll Collins can’t offer a new VW pickup, although the old VW pickups have proven popular because of mileage and longevity.

He said that VW — which is considering building a new plant in Chattanooga, Alabama or Michigan — could reintroduce a diesel pickup in the future.

Demand for VW diesels>/b>

No Volkswagen diesels are on the new VW lot or the used lot at Fairway.

Used ones just don’t show up that often, Collins said, a reality echoed by Barger at the Honda dealership, although used diesel VWs are for sale on eBay and elsewhere on the Internet.

“They go sometimes within minutes instead of days,” Collins said.

As for new Volkswagens, the German-based company’s last diesel models sold in the United States were made in 2006 and sold that year and through early 2007.

The 2009 models will be ready to sell in August, although Collins said a demonstrator will be available for test drives by month’s end for those considering a pre-order.

The Beetle, Jetta and Passat VW diesels are to be rated in the low 30 mpg range to the low 40 mpg range, but Collins said that based on past experience the cars may do better.

Some users, he said, have reported more than 40 mpg or up to 50 mpg on past models. He said his 1990 Jetta gets 35 to 40 mpg in town.

VW also is working on a diesel-electric hybrid.

“The new Jetta may get 50 miles per gallon in a car that seats five,” Collins said. “Who know what mileage the hybrid could get?”

Fuel for $2.99 a gallon

Until new hybrids and diesels make their entrance, Fairway and other Ford dealers are offering incentives including employee pricing that can cut $4,000 to $6,000 off the price of an F150, not counting regional incentives of $2,000 to $3,000.

Chrysler, meanwhile, is offering incentives that include a $2.99 a gallon fuel guarantee for purchasers of new vehicle through July 7. It’s called the Refuel America program.

“Chrysler provides you with a gas card that locks in 12,000 miles per year for three years at $2.99,” Alley said. “Your credit card is billed for the difference” between the selling price and $2.99.

The amount is determined by the rated mileage for each vehicle, or in the case of non-rated Dodge 2500 or 3500 pickup trucks a formula that works out similar to the gas-powered 1500 trucks.

Alley said the offer has proven attractive for customers of all types of vehicles.

For a 2500 or three-quarter-ton diesel truck, the offer is $2.99 diesel and $2,000 cash back or $4,500 cash back without the gas card.

He said the 12,000 miles worth of fuel for each year must be used within that time frame but can be used on any vehicle.

Dalton at Fairway used cars said that hybrids have gained some popularity, including the Ford Escape hybrid that is rated for up to 35 mpg. He said they are best suited for in-city use and that some large hybrids actually get lower mileage on the highway than in town.

He said Volkswagen had to redesign its engines to work on “dirtier” American diesel rather than “cleaner” German diesel, although new reports emphasized that the reconfiguring was to meet EPA and California emission standards.

Although Chrysler products are flex fuel capable, Alley said that customers tell his employees that E85, which is 85 percent ethanol usable in flex fuel vehicles, is not cost effective for them because the lower price per gallon does not offset lower miles per gallon.

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