CNW Survey: Wealthy Households Worry About Gas Prices, Too
It took a couple of years of high gas prices, but since gas topped $3 per gallon and mostly stayed there, even the wealthiest households have increasingly begun to take gas prices into account when choosing a vehicle, according to a survey by CNW Marketing Research, Bandon, Ore.
That's significant because a hallmark of the last several years of U.S. auto sales has been that luxury import brands like BMW, Lexus and Mercedes-Benz have outperformed the rest of the market. That's continued even though, by definition, luxury cars with the most powerful engines tend to have terrible gas mileage.
U.S. auto sales hit a peak of 17.4 million light vehicles in 2000, but have since slumped to about 16.1 million in 2007. Forecasts for 2008 are around 15.5 million, the worst in at least a decade. But Mercedes-Benz, for instance, has enjoyed 15 consecutive years of growth in U.S. sales through 2007, including ten consecutive record years.
A chill in luxury sales could indicate a more serious downturn. However, growing concern about gas prices doesn't mean the rich aren't buying anything, they're just being more careful.
"Let's not go overboard on this," said Art Spinella, CNW president. "The upper income households are, for example, buying high-end hybrids rather than gasoline-only versions of GM SUVs, Lexus and other big-ticket models," he wrote in a May 16 newsletter.
Still, the survey results are a sign of the times. Ernst Lieb, president and CEO of Mercedes-Benz USA LLC, based in Montvale, N.J., said separately on May 15 that gas prices are a "huge concern" for his customers, and that Mercedes-Benz is working on bringing more fuel-efficient models to the U.S. market, including hybrids and diesels.
As you might expect, concern about gas prices lines up fairly neatly with income. According to the survey, respondents in the lowest household income bracket, $25,000-$35,000 were most likely to be the most concerned about gas prices when choosing a vehicle, at 61.2 percent as of the first quarter of 2008. In contrast, only 26.7 percent of the respondents from the highest $150,000-$200,000 category in the survey picked the "top box," indicating they were most concerned.
However, that last number has grown sharply since the middle of 2006. Gas prices started to spike in 2004, but through the second quarter of 2006, "top box" concern among those wealthy households stayed under 5 percent.
The timing makes it look as if the second time premium gas hit $3 per gallon could have been a tipping point.
In the second quarter of 2006, premium gasoline (these are wealthy households, after all) hit a national average of about $3.09 per gallon, according to the Energy Information Administration. It had spiked above $3 before, but went back down. It dipped below $3 again in late 2006 until early 2007, but since then it has stayed above $3. At the end of the first quarter of 2008, it was $3.48.