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Fri, Jun 04, 2004 - Page 12 News List

Americans snap up gas-guzzlers

SPLURGING OUT Consumers bought 1.63 million new vehicles in last month and many chose high-mileage light trucks and SUVs, despite record-high gasoline prices

AFP , DETROIT, MICHIGAN

US consumers shrugged off concerns about record gas prices last month, snapping up new vehicles, particularly gas-guzzling pickup trucks and sport utility vehicles (SUVs), at a pace not seen since last August.

Americans bought 1.63 million new vehicles in last month, up more than 3 percent from May last year, according to the auto analysis firm Autodata Corp. in New Jersey.

Consumers bought new vehicles at the fastest pace in nine months -- buoyed by heavy incentives and the strengthening US economic

recovery.

Many buyers splurged on high-mileage pick-ups and SUVs, apparently unphased by a weeks-long run of record gas prices that many analysts had predicted would choke off demand for the perennially popular four by fours.

Light trucks accounted for about 55 percent of units sold last month and General Motors Corp. reported a double-digit surge in demand for trucks from a year ago.

"Consumers are weathering the passing storm related to the temporary increase in fuel prices and voting their preferences by purchasing record numbers of pickups and SUVs," said GM's North America sales chief John Smith.

GM truck sales and SUV sales set an industry record for the month of May, and some of its best sellers were of the gas-guzzling variety, such as its Cadillac Escalade and the GMC Yukon and Yukon XL.

GM economist Paul Ballew suggested that gas prices would have to go as high as US$3.50 a gallon and stay there for as long as 18 months before they had any tangible effect on purchasing decisions.

A gallon of unleaded regular gasoline averaged US$2.038 nationwide on Wednesday, up from US$1.475 a year ago, according to figures from the American Automobile Association.

"We really don't see a shift occurring," Ballew said, adding that GM was "not going to back off from our strategy of growing the truck part of the industry."

A string of studies have suggested that gas price inflation has led many Americans to rethink their love affair with the roomy, go-anywhere SUVs and pick-ups that have taken a chunk out of the market in passenger car sales in recent years.

The latest such poll, released on Wednesday by Harris Interactive, said the percentage of car buyers changing their mind about their next car purchase had jumped 10 points to nearly 50 percent of those interviewed in the past 30 days.

But automakers insist there was no indication yet that concern over fuel prices or fuel economy had had any tangible effect on sales of light trucks and SUVs.

"Industry sales have remained strong despite higher gas prices," said Jim Press, chief operating officer of Toyota's US sales arm. "We have not seen a major shift to smaller, more fuel-efficient cars and the light truck segment is still showing its strength."

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