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Gas Prices Could Hurt Truck Sales

June 13, 2000

DETROIT (AP) _ The recent spike in gasoline prices, combined with rising interest rates and a volatile stock market, could dampen demand for gas-guzzling light trucks, some analysts say.

``At $1.70 a gallon, we’re seeing people delay their purchase decisions,″ said Art Spinella of CNW Research in Bandon, Ore. ``At $2 a gallon, they postpone the decision for anywhere from eight months to a year.″

While most government indicators show the economy slowing gradually rather than crashing, spiraling gas prices have rattled nerves among some auto executives. This comes as auto sales fell last month in their first monthly decline in nearly two years.

The daily sales rate for domestic car and truck sales slipped 2 percent in May.

According to the Energy Department, the average price of regular grade gasoline in areas requiring reformulated gasoline nationwide was $1.63 a gallon on June 5, or 9 cents a gallon more than the average price of gasoline sold in other parts of the country that not require RFG.

DaimlerChrysler AG economist Van Bussmann told The Detroit News for a story Tuesday that ``we still need a high-powered microscope to see any fallout from higher gasoline prices and interest rates.″

``Sport utility and pickup buyers are less vulnerable to spikes in gas prices. But our worries are the industry’s worries,″ he told the newspaper.

Some industry watchers say they wonder whether the truck market has peaked and consumers are poised to move into a new crop of small cars, such as the Chrysler PT Cruiser and the Ford Focus.

``I think the pendulum is going to come crashing back,″ said Chris Denove of J.D. Power & Associates.

The effect of higher gas prices is cumulative on consumers, Spinella said. His company compiles a ``jitters index″ every month, and concerns over gas prices registered higher this month than at any time since 1994.

``If automakers aren’t seeing the jitters, we sure are,″ he said.

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