The article is brought to you by Staveley Head.These changes on the gasoline prices seem to be moving forward sort of like the gasoline prices back in the summer of 2008 and while we aren’t at $4.00 per gallon yet here in the U.S., several people are already predicting that gasoline prices will continue to rise well over the $4 per gallon mark.
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So since many consumers really haven’t changed their current driving habits yet, the question is: “At what price per gallon of gasoline will consumers began to not only change their driving habits, but even go so far as to buy a different vehicle with better fuel economy?”
According to LeaseTrader.com, who is using data from back in the summer of 2008, they believe that consumers wouldn’t change current habits or upgrade their vehicle for that matter until gasoline prices hit $4 per gallon here in the United States.
Numbers from the summer of 2008 show that once gasoline prices hit $4 per gallon, 78% of all leased SUV/trucks transfers were due to high gasoline prices. Consumers simply wanted better fuel economy or to reduce their fuel consumption.
Going along with that data from back in the summer of 2008, the headlines at that time read where several consumers where making huge changes including altering their driving habit and trading in their vehicles for better fuel economy vehicles.
Consumers would be buying small cars, small SUV’s, hybrids and more, except big vehicles. Headlines also highlighted that consumers were driving hundreds of thousands of miles less during that year compared to previous years.
A lot of consumers would take several suggestions that were made at the time and combine trips where they could and in some cases just stay home altogether. Consumers would only take trips that were needed which commonly included driving to work and once a week heading out for groceries.
And if consumers during that time needed additional items, they would either pick it up on their journey to or from work or wait until the day they headed out for groceries and combine that trip with whatever else they wanted.
But at the same time, once gasoline prices did finally in fact return to a somewhat normal level, consumers returned not only to their old driving habits with driving a lot more, but many would once again be turned back on to buying larger vehicles with no regard to future gasoline prices and only to what was currently going on.
So now that gasoline prices are rising again, LeaseTrader.com believes drivers won't take specific action (reduced gas consumption, exiting lease contracts) until gas reaches $4 per gallon.
Personally from what I have seen so far out of most consumers here in the U.S., I agree with LeaseTrader.com in that drivers wouldn’t take major action until gasoline prices reach $4 per gallon.
However I do believe that while most consumers wouldn’t make changes in their current driving habits until bigger gasoline prices hit, I do see several consumers are already making changes now and that’s a good thing.
I know that in my family, we have already make changes to our driving habits by combining trips once again, not wanted to take long non-justified trips and just staying local if we go out at all.
As for car buying, we have already made changes their too. Two months ago when searching for another pre-owned car, we choice to skip the SUV with low fuel economy and go with a family sedan with better fuel economy that would meet our needs including AWD (and at least assembled in the United States, that’s another subject altogether.)
I would think that most consumers would do the same and be proactive, instead of reactive, but not yet. Consumers are still driving heavily.
Finally as far as how high gasoline prices will go, when will they come back down and to what level? I would say $4 per gallon will unfortunately happen over the next few months here in the U.S. and we will see the same reaction as we did in the summer 2008.
Look for an influx of vehicle models for transfer and trade-ins, including the Chevy Silverado and Avalanche, Cadillac Escalade, GMC Sierra, Ford Expedition, Mercedes GL, BMW X5 and more.
As for the future, namely when will gasoline prices return? I believe that will take a while, maybe even towards early winter (November-December 2011) and then I don’t believe that we will see anything below $3 per gallon. Basically if you’re making changes, you should make them long term changes.