Following a precipitous drop this March, sales of new cars are likely to slow during the second quarter of 2012, according to a new survey of consumer car-buying intentions. Rising gasoline prices appear to be the primary driver behind the drop.
TechnoMetrica, a market research firm, has interviewed U.S. consumers every month since 2007 to determine their interest in purchasing or leasing a new vehicle within the next six months. Their latest Auto Demand Index (ADI), based on telephone interviews with more than 900 respondents, showed a gradual but positive trend, beginning last August and peaking this January at an index of 105, or as strong as the demand was during the industry’s best sales year, 2007.
In March, the ADI abruptly dropped by more than half to 49. The April survey revealed an ADI of 67, confirming new-car purchase intention has dropped significantly from its January high. This continued drop in new-car purchase intent will likely express itself as lower new-car sales during the second quarter, TechnoMetrica said.
The ADI has a very high correlation to actual new vehicle sales, the company said.
The No. 1 factor in the dramatic slowing of new-car consideration has been the rapidly increasing price of gasoline, said Raghavan Mayur, president of TechnoMetrica. Over one-fourth (26 percent) of consumers surveyed said they are postponing car purchases as a result of high gasoline prices.
The price of gasoline has a huge impact on people’s budgets and behaviors, according to TechnoMetrica research. High gasoline prices function as a regressive tax. They take money out of people’s pockets and have a negative effect on all of their discretionary spending as well as their new-car purchase intent.
"Rising gasoline prices appear to be the primary driver behind the drop in ADI," Mayur said. "It is not the only cause to be sure, but it has a very large and real impact on a family budget. Consumers today are saying they would rather address this problem by driving less and postponing new car purchases, rather than by buying smaller or alternate-fuel vehicles.”
Reach BusinessNewsDaily senior writer Ned Smith at email@example.com. Follow him on Twitter @nedbsmith.