Issue: Jun 2004


Windecker



Upsize and Upscale Lead the Way

by Ray Windecker

Americans spend more for the truck they want and its still trucks that they want.

American consumers are known more for spending than saving. That concept is as true for their automotive spending as for their mortgages. Virtually every buyer of a car or light truck will calculate to the last dollar just how much they can afford with the least amount of fiscal discomfort prior to buying or leasing whatever vehicle has caught their eye. Then they will promptly spend a bit more.









 
The Chevrolet Tahoe sits at the top of the chart at +54 percent.
 
That spending pattern, captured in a set of Federal Government data relating to consumer transportation costs, has shown a consistent spending pattern since 1970. During those years, in an effort to keep the total household costs in balance, consumers push and pull one or another of the individual transportation cost ingredients down payments, monthly payments, fuel, assumed depreciation, insurance and license costs up or down to keep the transportation cost running close to 12 percent of all personal consumption expenditures.

As product content both desired and mandated moved upstream monthly payments were extended to keep the books balanced. Occasional gas-price spikes, particularly if they formed a new gas-price plateau, brought a short-term swing towards the fuelsippers, but later, as fuel efficiency increased, thus again cutting the per-mile cost, more miles were driven in ever-larger vehicles. Consumers appear to have a self-regulating economic balance wheel implanted somewhere between their minds and their checkbooks that maintains their transportation expenditures in balance within their total personal expenditures.

The economic balancing act has now taken into account the current cut and slash price and terms structure being vigorously pursued by most manufacturers, particularly the Detroiters.

Combined car and truck sales in the first quarter of 2004 were up 4 percent from the year-ago level, lead by SUVs, primarily those of the prestige segments. Of the top-10 U.S. segment-growth leaders, seven were a truck of some sort, five were SUVs, four contained the prestige word, two were of the large variety and the word small appeared only once, tied in with the somewhat pricier sporty cars. In the lower end of the salesgrowth/ lost list, small, basic and midsize are the predominate segment descriptions, but included are two prestige segments, both cars, both slowing as the prestige SUVs siphon off the high-bucks customers.

The American light-vehicle buyers, with their economic balance wheels cheerfully clicking away, have embraced the lower transaction prices, not by saving, but by buying bigger and fancier units. How American, how fortunate for their industry.


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