Thursday, Aug. 18, 2005 | 9:35 a.m.
SOUTHFIELD, Mich. -- Gas stations advertising record-high prices are all around him, but fuel efficiency was the furthest thing from Dave Pongratz's mind as he picked up his new Hummer H3 in this Detroit suburb on Wednesday.
Pongratz, 54, was getting the sport utility vehicle as a surprise for his wife, Sandy, an avid camper and kayaker who wants a safe vehicle with good towing capacity. The H3's gas mileage -- about 19 miles per gallon in the city -- wasn't an issue for Pongratz, who said he'd rather go to fewer restaurants than buy a vehicle with higher fuel economy.
"Everybody decides, 'What do I want to trade for what I want to do?' " said Pongratz, a plant foreman for General Motors Corp., which makes the Hummer.
Gas prices soared to a record $2.55 per gallon nationwide last week, and some areas already are seeing prices at or above $3 a gallon. But automakers and industry watchers say the price spike isn't yet affecting consumers' car buying habits.
Automakers won't release August sales figures for another two weeks, but they say many customers seem to have Pongratz's attitude. Kevin McCormick, a spokesman for DaimlerChrysler AG's Chrysler Group, said the company isn't seeing a slowdown in any segment, including its popular pickup trucks. Toyota Motor Corp. also said gas prices don't seem to be affecting sales.
Ford Motor Co.'s U.S. sales analysis manager, George Pipas, predicts August will be a strong month for the industry, although not as strong as June and July. But it's too early to conclude that a slowdown in August is due to high gas prices, Pipas said.
Instead, many people bought vehicles earlier this summer, when the Big Three introduced discount programs that let customers buy 2005 vehicles at the employee price. Ford and GM plan to end those discounts Sept. 6; Chrysler is continuing its discount indefinitely.
"We had this tidal surge in July," Pipas said. "That's not going to be duplicated in August."
At Junction Auto Family in Chardon, Ohio, GM truck dealer Ed Babcock said his sales will probably be down in August, but he doesn't blame gas prices.
"In the past when gas prices have gone up, we've not seen the change in sales," Babcock said. "If I had them, I think I could sell them."
Pipas said gas prices will affect the market by accelerating a trend toward crossovers and smaller vehicles that automakers have been seeing for several years. Ford has introduced a crossover and several hybrid vehicles to meet that demand, but won't bring new products out any faster because of gas prices.
"You can't really tinker with your product cycle plan as a response to higher gas prices, because we're talking about lead times that are two or three years in advance," Pipas said.
Toyota spokesman John McCandless said the company also won't speed up any of its product launches because of gas prices. Toyota plans to introduce a hybrid version of its Camry sedan in late 2006, he said.
Tom Libby, senior director of industry analysis for the Power Information Network, said there's no need for automakers to panic just yet. Customers' car-buying habits likely won't change as long as gas prices stay lower than $4 a gallon and people believe the spike is only temporary, he said. But if prices go over $4 a gallon for more than a year, all bets are off.
Some dealers say they're already seeing changes in customer behavior because of gas prices. Peter Welch, president of the 1,400-member California Motor Car Dealers Association, said many families in the state still have a minivan or an SUV in the garage but are buying a smaller, more fuel-efficient car for quick errands or commutes. He expects that number to grow once hybrid vehicle drivers are allowed to use California's car-pool lanes in a few weeks.
Kim Bushy, who manages Suburban Buick Co. in Wheaton, Ill., said some customers who were interested in a sport utility vehicle or truck have told her they're reconsidering.
"I think there's a little bit of sticker shock at the gas pump," Bushy said. "It's helping the dealers that have gas-efficient vehicles, but people are looking twice at buying these huge SUVs and trucks."
But then there's people like Pongratz. At Detroit Hummer, where he bought his 2006 H3, general manager Ken Reszczyk said sales have been brisk.
"Let's face it. People go out and pay $1.50 for a 12-ounce bottle of water," Reszczyk said.
GM shares Wednesday were up one cent to close at $34.07 on the New York Stock Exchange. Ford shares were down 13 cents to $9.93, and DaimlerChrysler shares were down 49 cents to $50.17.
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