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After Years of Neglect, the Industry Starts Paying Attention

Industry Report – Best-Selling VehiclesAngst over gas prices will likely rise alongside the mercury as motorists hit the road during the warm-weather months.

Kathryn Reynolds, corporate controller for Open Road Auto Group in Edison, says more people these days are buying smaller autos in order to get more bang for their fuel bucks. “The last time we had a big increase in gas prices, there were people who couldn’t afford to drive,” Reynolds recalls, referring to last year. At that time, the dealership cut back on using company cars that required lots of gas to save on spending at the pump, she says.

“Paying $60 to fill up the tank can be a huge deal,” says Reynolds.

According to the AAA, gas prices April 3 averaged $2.70 per gallon for regular unleaded, 20 cents higher than the month-ago price. Two years ago, in September 2005, gas prices reached an all-time high, averaging about $3.05 per gallon for unleaded regular, says the association.

Manufacturers are taking into account consumers’ concerns by building more vehicles that offer better gas mileage and produce fewer emissions, making them more environmentally friendly.

Steve Schneider, CEO of Santa Rosa, Calif.-based Zap, a producer of electric autos in addition to other battery-powered devices, recently said that gas prices, in addition to global-warming concerns, has brought unprecedented attention to the auto industry. “We believe U.S. consumers are feeling the pinch of higher gas prices, which are reaching historic levels and pushing millions to search for less expensive alternatives,” says Schneider. Zap says it is currently marketing the only electric vehicles that meet all U.S. Department of Transportation standards for on-road use.

Vehicles such as those developed by Zap are bound to go a long way in places like California where officials are setting new standards to cut tailpipe emissions. The state’s efforts to be exempt from the Clean Air Act and set higher vehicle emissions standards than required by the U.S. Environmental Protection Agency gained momentum in a recent U.S. Supreme Court ruling. Other states are likely to follow suit.

Drivers wanting to cut back on both gas costs and reduce emission may consider buying a hybrid-electric vehicle (HEV) powered by gas and electricity. According to Houston-based Plunkett Research, 1.5 percent of the 16.5 million cars and light trucks sold in the United States in 2006 were hybrid.

Tom Murphy, a general manager for Pennsauken-based Holman Enterprises, said interest in hybrid vehicles has increased among his customers. Holman operates several dealerships in New Jersey and Florida.

“Last summer when gas was over $3 per gallon we had a big surge in Escape hybrid interest,” says Murphy. “We sold all the hybrids we had in stock.”

E-mail to ydarling@njbiz.com
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