Schaumburg, Ill., July 22, 2009 — An analysis of vehicle sales and gas prices by Experian Automotive has found that while higher gas prices may create an immediate demand for small cars, this demand is not sustained, as many might think. Measuring vehicle sales against the erratic fluctuations in gas prices in 2008 and early 2009, Experian Automotive’s research showed that as fast as market share for vehicles in the Small Car – Economy class escalated, it normalized just as quickly — even as gas prices remained 25 percent higher than at the beginning of the year.
In January 2008, gas prices averaged $3 per gallon across the country and Small Car – Economy class market share was 10 percent, according to Experian Automotive’s findings. Small Car – Economy class market share peaked in May 2008 at 17 percent with gas prices at $3.70 per gallon. However, when gas prices peaked at $4.09 per gallon in August, Small Car – Economy class market share already was starting to slip. In September, when gas prices fell back slightly to $3.70 per gallon, Small Car – Economy class market share had already returned to 10 percent.
“Conventional wisdom would suggest small car market share would rise and fall at a similar rate to the price of gas, but that’s not what our data shows,” said Scott Waldron, president of Experian Automotive. “For auto manufacturers and other businesses looking to gas prices to help anticipate consumer demand, our research has shown this to be only part of the equation.”
Jeff Anderson, head of Consulting and Analytics for Experian Automotive, cautioned automotive manufacturers from reading too much into last summer’s rapid spike in small car demand.
“Everyone reported on the rapid escalation of small-car demand, but the rapid descent of small car market share went somewhat unnoticed,” Anderson said. “Anyone who predicts a long-term shift in consumer car-buying sentiment based solely on last summer’s knee-jerk reaction to gas price increases could be in for a surprise.”
According to Experian Automotive’s research, the Mid Range Car segment appeared to be the most resilient to gas price increases, with its market share reaching 26 percent in May 2008, when gas prices rose to $3.76 per gallon. The Mid Range Car segment then maintained a steady average of market share, holding 24 percent of the market in March 2009, as gas prices dipped below $2 per gallon. The market stability of the Mid Range Car segment was carried primarily by significant gains by the Honda Accord and Honda Civic, at 3.8 percent and 3.5 percent, respectively, in March 2009, which offset losses in other brands.
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About Experian Automotive
Experian Automotive, a part of Experian, delivers information services to manufacturers, dealers, finance and insurance companies, and consumers. Experian® helps automotive clients increase customer loyalty, target and win new business, and make better lending and vehicle purchase decisions. Its National Vehicle Database, housing more than 500 million vehicles, along with Experian’s credit, consumer and business information assets, meets the industry’s growing demand for an integrated information source. Experian’s advanced decision support services help clients turn this information into improved business results. Experian technology supports several top automotive Web sites, including eBay Motors, CarsDirect.com, CarMax.com and NADAguides.com. For more information on Experian Automotive and its suite of services, visit our Web site at http://www.experianautomotive.com.
DeVilling Group for Experian Automotive
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