Low Gas Prices Fueling Truck, SUV & RV Sales
RV Business
With the price of gas down nearly a dollar a gallon from this time last year, consumers who are paying less at the pump are opting for bigger, more gas-thirsty vehicles.
The Omaha World-Herald reported that easier lending terms — including loans written for seven years — also are helping sales of new pickup trucks, SUVs and high-end luxury cars shift into high gear.
In the first six months of 2015, consumers purchased more than 8.5 million new vehicles, compared with 8.1 million in the first half of 2014, a 4.4 percent increase. Total new car sales are expected to reach 17 million by the end of the year, the biggest sales year since 2006, according to Autonews.com.
That compares with the 9 million new vehicles sold in 2009, during the depths of the Great Recession.
Confident consumers are buying or leasing larger pickup trucks, larger SUVs and crossovers, the car-based vehicles that have an SUV-like configuration, said Rick Johnson, print editor of Automotive News. He said luxury cars are hot sellers, too.
Even RV sales are sizzling, and they’re not exactly known to sip fuel, with many motorhomes logging 7 to 12 miles per gallon.
Ed Leach, the owner of Leach Camper Sales in Council Bluffs, said he’s expecting the best sales year since 2006.
Baby Boomers are among the biggest buying segment, but younger families are snapping up lower-priced and used RVs, Leach said.
“Yes, gas prices are lower, but people, particularly those close to retirement, are feeling flush,” Leach said.
Their 401(k)s, many of which plummeted in value in 2007, have recovered. “All of a sudden their 401(k) is worth a lot of money,” he said, making them feel wealthier. That’s what Leach said is driving his sales.
Nationally, RV sales are expected to top 365,000 units this year, up 11 percent over the previous year, according to the Recreation Vehicle Industry Association.
The average price for a gallon of regular gasoline in Nebraska was $2.68 Wednesday, compared with $3.51 a year ago. In Iowa, the price of regular was $2.67, compared with $3.48 a year ago, according to AAA’s Daily Fuel Gauge Report.
It’s not just lower prices at the pump fueling new and used car purchases — the availability of longer-term loans, relatively low interest rates, and less expensive leasing options are prompting consumers to consider leasing, or buying the next model up, the industry experts say.
“Because vehicles don’t get cheaper — they get more expensive — we’re doing more 72-month loans and actually starting to see 84-month loan terms,” said Adams, Atchley’s general manager.
Over the life of the loan, consumers pay more for the vehicle, but that doesn’t seem to be dissuading consumers from longer financing terms.
In the first three months of this year, “loans lasting 73 to 84 months accounted for a record-setting 29.5 percent all of new vehicles financed, an 18.6 percent rise” over the same period a year ago. In 2010, less than 10 percent of loans were that long, according to Experian Automotive. Average loan amounts also bumped up to $28,711 in the first quarter of the year from $27,612, Experian reported.
On the other hand, sales of smaller, more fuel-efficient sedans, hybrids and electric vehicles have stalled.
“They are not doing well,” said Johnson with Automotive News. “Gas prices have a whole lot to do with that — and a lack of range” when it comes to how far the electric cars can go on one charge, he said.
And though gas prices could go up, potential auto buyers appear to have adopted a devil-may-care attitude — to a point, Johnson said. “Nobody seems to think $3 a gallon is a disincentive.”
Originally published here.