Automakers Don’t Like Rising Gasoline Prices Any More Than You Do


You think you hate those rising gas prices – well, drivers aren’t the only ones. Automakers aren’t too pleased about skyrocketing gas prices either as they could undermine years of design and manufacturing planning.

Gas prices could hit $4-plus per gallon sooner rather than later, and that could spell doom for automakers. This is due not only to the price of gas, but also materials that make up car components such as steel, aluminum, copper and platinum.

When the price of gas goes up, so does the demand for smaller cars, like in 2008 when gas prices reached all-time highs and so did interest in cars like the Toyota Corolla, Honda Civic and Ford Focus. But when gas prices dropped soon after, these small cars were stuck to gather moss on dealer lots.

And although the gas prices have been rising slower than in 2008, it has still been following the same pattern – it went from 32 percent in January to $4.11 per gallon in July, then fell back to $1.65 by year end. Even though the average U.S. gas price is 25 percent below where it was then, experts are reporting a switch to smaller vehicles.

“We’re seeing consumers quickly shift back to a higher mix of fuel-efficient cars and now trucks are actually starting to slow down,” said Bob Carter, U.S. market brand chief for Toyota Motor Co. “Sixty days ago, we found the opposite happening.”

Would you switch to a smaller and more fuel-efficient car now that gas prices are going up? Let us know your thoughts in the comments section below.

[Source: Reuters]