Cheap oil drives changes in Auto industry

10-Jan-2016

For more than a year, low gasoline prices have been adding extra froth to the nation's steadily rising auto sales.

Dealers and automakers have enjoyed a surge in sales of high-margin pickups and SUVs. For consumers, paying less at the pump has boosted their confidence about splurging on new wheels and loading up on high-trim options.

Ford Motor Co., General Motors and other automakers are reporting record North American profits, and when the industry reports December sales this week, 2015 may turn out to be the best year ever, with U.S. sales topping the 17.4 million vehicles that were sold in 2000.

But there is a flip side to the cheap-oil dividend: It crimps vehicle sales in regions that are heavy in oil and gas production.

The weakness can be tough to detect, because the impact tends to be localized, and obscured in state-by-state data by broader strength in the economy. But dealers in certain markets say they are seeing a retreat from the drilling boom that helped drive up sales and profits.

"Definitely [crude] oil prices have impacted us," said Mitchell Dale, owner of McRee Ford in Dickinson, Texas, between Houston and Galveston. "The consumer has gone into a little bit of a cautious mode. Sales are still fairly good but aren't moving at a real brisk pace, and traffic is off." (by Neal E. Boudette, Automotive News(


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