An article in the Wall Street
Journal online predicts that in 2012 it will become harder to find good deals
on fuel efficient cars, but it will be cheaper to find larger cars such as
SUVs. It’s being estimated that car sales rose 20% in February from last month
and the most popular types of cars sold were small sedans and fuel efficient
subcompacts. This is likely due to rising gas prices and consumer’s desire to
save more at the pump. As a result of the demand of these cars rising, the
price is also rising. As expected, the demand for SUVs has fallen in recent
years especially during months when fuel prices rise. This was no different in
February as demand is again down for these gas guzzlers. This likely means that
car dealers will be offering incentives and lower prices in an effort to
increase demand. I would expect this trend to continue as long as gas prices
continue to rise.
I found this to be very interesting. I never thought of the fact, that high gas prices actually help bigger, less fuel efficient vehicles. I would still approach this from a normative, rather than positive economic approach and buy the smaller car. However, I realize that my decision would be economically inferior. Very interesting blog.
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