Cheaper Gas Spurring Big-Car Sales? Look Again
May. 06, 1986
DETROIT (AP) _ Despite the dramatic drop in gasoline prices this year, many Americans are snubbing Detroit's heavy metal instead of rushing to buy traditional large cars.
Sales of the Big Three's rear-wheel drive large and luxury cars are down more than 30 percent from a year ago, markedly worse than the 7.5 percent decrease for all domestic cars.
Ten of the 13 cars in the segment are suffering, and they include names synonymous with acres of sheet metal, big engines and America's open road: the Chevrolet Caprice, Ford Crown Victoria, the Chrysler Fifth Avenue and Oldsmobile Custom Cruiser station wagon.
Business is good enough that automakers are expected to keep making the big cars, but sales nevertheless are down. The apparent reasons:
- The rebates and cut-rate financing promotions offered by the Big Three have mostly been for front-wheel drive cars with four-cylinder engines as General Motors Corp. and Ford Motor Co. scramble to meet federal fuel economy standards.
- Detroit's newest products are front-wheel drive midsize cars, such as the new Ford Taurus-Mercury Sable and GM's Buick Riviera and LeSabre and Olds Toronado. Consumer taste also has shifted to midsize, rather than large, family station wagons. And GM in 1983 brought out front-wheel drive large and luxury cars available with V-8 engines. They compete against its own older cars.
- Proliferation of utilitarian vehicles such as minivans and greater availability of larger foreign cars.
- Many models are still around because the price of gasoline never reached the $3 a gallon Detroit expected.
Gasoline prices, which hit a nationwide average high of $1.38 in April 1981 and remained above $1.24 at this time last year, fell to $1.20 in January and to about 90 cents last month, according oil industry analyst Dan Lundberg.
But ''large-car sales show no increase that can be attributed to lower fuel costs,'' said L. Raymond Windecker, Ford's chief of research and analysis.
GM's total sales of traditional large cars is down 42 percent compared with a year ago, Ford's are off nearly 17 percent and Chrysler's by nearly 30 percent. For the market as a whole, GM is down 5 percent, Ford 10.3 percent and Chrysler 15.6 percent.
''We've seen a more reflective, critical and sophisticated consumer who is far less likely to react in a predictable mood,'' said consumer psychologist Joseph Smith of the Oxtoby-Smith Inc. research firm in New York.
The three exceptions to the downturn are Detroit's biggest Big Berthas: GM's Cadillac Fleetwood Brougham at 18 feet, 5 inches and 4,029 pounds; Ford's Lincoln Town Car at 18 feet, 3 inches and 4,038 pounds; and GM's Pontiac Parisienne at 17 feet, 6 inches and 3,383 pounds.
Town Car sales are up 2.3 percent from a year ago. The big Caddy is selling so well - up 35 percent - that Cadillac this week announced a production boost. Two years ago, GM was saying aging Fleetwood factories might be closed by now.
The one market apparently being aided by lower fuel prices is used big cars, which are depreciating in value more slowly, said Howard Tullman, president of Certified Collateral Corp. in Chicago.
A typical 1983 Chrysler Fifth Avenue had declined in value only 6.6 percent since last fall, or from $9,100 to $8,500, instead of the 9 percent to 10 percent forecast by commercial price guides, Tullman said.