by Jimmy Thiel

Created on: June 07, 2008   Last Updated: June 08, 2008

With recent gas prices rising at an alarming rate, investors in the automobile sector are growing concerned about the effects this will have on new car sales. Stock prices for automobile manufacturers are continuing to suffer due to a less than desirable economy as it is. I would have to advise them not to go into panic mode just yet.

I have been in the automobile industry since 1993. One thing that I have taken note of over this fifteen year period is that consumers purchase in cycles. In the late eighties the mini van was the go to vehicle for the married with children crowd. Station wagons became a thing of the past and consumers stopped buying them. This did not slow down car sales in the least. The consumers just shifted to a different type of vehicle. The same can be said about the mini van as it was rapidly replaced by the SUV in the mid nineties.

Now that gas prices have reached record highs across the globe the newest cycle is beginning. SUV buyers are now converting to the new cross-over vehicles and their better fuel economy. Truck owners are trading at an alarming rate into passenger type vehicles. The exception being those truck owners that actually use their trucks for what they were designed for, and even they are downsizing.

The big three, being Ford, General Motors, and Chrysler may feel a pinch, as they have heavily marketed their trucks and SUV's for years. They are not known for fuel economy as well as they should be. The Ford Focus, Chevy Cobalt, and the Dodge Caliber are all great products these companies produce that have excellent fuel economy ratings. The problem is these vehicles have not been effectively marketed.

Due to the ineffective marketing strategies of the American companies; there is a measurable shift to the import sector. Toyota, Honda, Nissan, and the like are reaping the benefits. These vehicles have a historical reputation for both reliability and fuel economy, two of the biggest factors consumers are considering in today's economy.

Consumers today are buying smaller to mid-size vehicles with extra emphasis on fuel economy, but they are buying and will continue to buy. The next cycle will come in due time. It may be triggered by a change in the economy or a breakthrough in technology or any other unforeseeable future event. The one thing for sure is that people need transportation, and regardless of fuel prices, they will continue to purchase automobiles as long as they are produced.

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