Without a doubt, cars are one of the most important human inventions in the world’s history.
The veracity of that claim is seen in the sky-rocketing growth of the auto market all across the globe. The world would be so much different, probably worse off, if there were no cars.
While the auto market is one of the biggest in the world, certain factors impact sales and prices.
There have been questions whether gas prices are one of these factors and this article hopes to provide answers with all the facts and details needed.
Here’s the Short Answer to Whether Car Sales Rise Or Fall Based on Gas Prices:
Even with the growth of electric and hybrid cars, gas prices continue to impact car sales to a considerable extent. Studies show a surge in gas prices leads to a sharp decline in car sales. When gas is costly, buyers tend to go for smaller cars or hold on to older vehicles for longer.
How Do Gas Prices Affect Car Sales Prices?
The most obvious answer to this question is the interrelatedness of cars and gas. For the longest time, vehicles have relied on gas to run and both markets have been complimentary, mostly.
For instance, in 2008, there was an unprecedented surge in gas prices and that led to a sharp fall in automobile sales. Sales of “fuel-consuming” SUVs declined by over 25% and even the iconic best-selling Ford F-series witnessed a 27% sales drop in mid-2008.
However, once gas prices returned to the normal rates in 2010, SUV models began climbing in sales and by 2015, they started hitting record sales again.
Also, geopolitically induced spikes in gas prices have sparked forecast from industry experts indicating a massive decline in car sales. The how is simple-people are not willing to splash coin on a new car if it means they’d have to spend double the normal rate on fueling them.
Basically, what these stats show is that increase in gas prices cripple demand in the auto market, invariably leading to massive sales drop.
This is expected to change in the coming years and decades with the growing demand for electric vehicles across the world. It’s a long road ahead though, seeing as only less than 1% of cars on American roads are electric.
Can You Negotiate Better Car Deals When Gas Prices Are High?
Negotiating car prices at the dealership can land you much better deals. When gas prices are high, you can appropriate the gas situation during your negotiation to evoke some sympathy and consequently get a better deal.
Dealing with a salesperson during the negotiation stage requires some persuasion skills.
For instance, playing the “rising gas prices” card can appeal to the salesperson’s emotions and chop a few hundred, maybe thousand dollars off the deal.
You should research prices online and try this method out at in different dealerships. While it’s not guaranteed you’ll get a cut, the chances are pretty good. It’s literally a “nothing to lose” situation.
Do People Really Buy Fewer Cars When Gas Prices Go Up?
One of the major things people consider before buying a car is the fuel efficiency of the vehicle. That’s because of the general understanding that fuel prices take up a huge chunk of vehicles’ running costs.
Having established that, people who are considering buying new cars would generally get discouraged when car prices go up.
Some stall their plans, hoping to buy at a more opportune time, while others squash them altogether and keep their old vehicles.
For instance, the Ford F-150 is expected to take a big hit in sales figures by the end of the year despite its massive popularity. While it’s an amazing truck by all means, lots of people just aren’t willing to put up with these insane gas prices for a freshly bought car.
Is There Still a Shortage Of New Cars?
There is still very much a shortage of new cars due to the scarcity of microchips in the auto industry. The situation has kept car prices very high and led to a plunge in inventory.
Coupled with the rising gas prices, it has not been pretty for both manufacturers and buyers.
Experts, however, expect the situation to ease up towards the end of 2022 into early 2023.
And hopefully, gas prices would take some downward turn as well. A positive turnaround like that would be great news for both consumers and automakers.