3 ms·

> I've never bought the argument that cheap oil has a significant effect on car sales, especially in saturated developed markets. If you look at the sales figu

by jonknee 11y ago

> I've never bought the argument that cheap oil has a significant effect on car sales, especially in saturated developed markets. If you look at the sales figures it is quite obvious that you're not in the majority here. It's a little tricky to model because cars are all getting better mileage every year, but when gas is expensive gas guzzlers definitely experience a dip in sales (and vice versa). http://li.dyson.cornell.edu/pdf/AEJ_2009.pdf http://li.dyson.cornell.edu/pdf/AEJ_2009.pdf

gregpilling 11y ago
I agree. I sell truck accessories. Yes, it does have a significant effect. People really are that short sighted.
- gsibble 11y ago
  Never underestimate the stupidity of people.
roymurdock 11y ago
> Based on the simulation results, we estimate that a 10 percent increase in gasoline prices will generate a 0.22 percent increase in fleet fuel economy in the short run (one year) > We also find that sustained $4.00 per gallon gasoline prices will generate a 14 percent long-run increase in fleet fuel economy relative to 2005 levels, although this prediction should be interpreted cautiously in light of the relatively large out-of-sample price change considered and the Lucas critique (Robert E. Lucas, Jr. 1976) The strength of the effect of oil prices on fleet efficiency is 0.0022 over a year. I would consider that extremely incremental. Meanwhile, we observe a 22% decrease in total car sales over the 2007-2009 period due to changes in disposable income and household wealth. [1] So I would still argue that gas prices change the fleet efficiency mix around the margin, but that purchasing decisions are driven primarily by changes in income, government policy, and social norms. [1] http://www.federalreserve.gov/econresdata/feds/2014/files/201482pap.pdf http://www.federalreserve.gov/econresdata/feds/2014/files/20...
mywittyname 11y ago
The best proof of this behavior is the Prius. It's a simple appliance car that is cheap and reliable. By all accounts, it's a great car to own if cheap and dependable are your top considerations. However, the sales and depreciation of the Prius are highly correlated with gas prices to a much larger degree than similar economy cars, like the Camry. Car sales are at record highs and Toyota just released a next generation (which always coincides with increased sales and higher transaction prices). Yet, sales are down 12% YoY. Meanwhile, Jeep sales are at record levels and their best selling models are also their least fuel efficient.

by jonknee 11y ago

gregpilling 11y ago

I agree. I sell truck accessories. Yes, it does have a significant effect. People really are that short sighted.

gsibble 11y ago
Never underestimate the stupidity of people.

roymurdock 11y ago

> Based on the simulation results, we estimate that a 10 percent increase in gasoline prices will generate a 0.22 percent increase in fleet fuel economy in the short run (one year) > We also find that sustained $4.00 per gallon gasoline prices will generate a 14 percent long-run increase in fleet fuel economy relative to 2005 levels, although this prediction should be interpreted cautiously in light of the relatively large out-of-sample price change considered and the Lucas critique (Robert E. Lucas, Jr. 1976) The strength of the effect of oil prices on fleet efficiency is 0.0022 over a year. I would consider that extremely incremental. Meanwhile, we observe a 22% decrease in total car sales over the 2007-2009 period due to changes in disposable income and household wealth. [1] So I would still argue that gas prices change the fleet efficiency mix around the margin, but that purchasing decisions are driven primarily by changes in income, government policy, and social norms. [1] http://www.federalreserve.gov/econresdata/feds/2014/files/201482pap.pdf http://www.federalreserve.gov/econresdata/feds/2014/files/20...

mywittyname 11y ago

The best proof of this behavior is the Prius. It's a simple appliance car that is cheap and reliable. By all accounts, it's a great car to own if cheap and dependable are your top considerations. However, the sales and depreciation of the Prius are highly correlated with gas prices to a much larger degree than similar economy cars, like the Camry. Car sales are at record highs and Toyota just released a next generation (which always coincides with increased sales and higher transaction prices). Yet, sales are down 12% YoY. Meanwhile, Jeep sales are at record levels and their best selling models are also their least fuel efficient.