2010 Toyota Prius

2010 Toyota Prius

Thursday, the Rocky Mountain Auto Press held a membership luncheon with a featured guest speaker. This particular speaker is no stranger to the automotive industry or politics. No, Tim Jackson, President of the Colorado Auto Dealers Association (CADA), spends his day fighting for dealer rights and equality in the auto industry. This gives Tim and insiders look at the industry and a different perspective from the average Joe on the street. Since this is AllSmallCars.com, the topic we find most interesting is one that centers on small cars like the Toyota Prius and the public’s buying pattern.

During Jackson’s presentation he recounted a story of a local Colorado Toyota dealer that in January of 2008 had a line of new Toyota Prius models on his lot. The problem? They just weren’t selling and to punctuate that point Toyota had started offering the first ever sales incentives on the Prius. Then something happened that turned the tide of the small economy car market; gas prices jumped only to land near $4 a gallon (even higher in some places with diesel being most expensive). All of a sudden dealers saw people trying to shed their large trucks and sport utility vehicles for smaller more economical cars. Environmentalism and Economy became the focus for the summer of 2008. The same Toyota dealer that had a surplus of Prius models on the lot, now had to be put on a waiting list in order to get more cars. People were saying that this was the death of SUVs and trucks for the masses.

Lightning Hybrids LH4 World Debut at the 2009 Denver Auto Show

Lightning Hybrids LH4 World Debut at the 2009 Denver Auto Show

However, the tide turned again and the economy took a significant hit, spending dropped rapidly and the price of gas ended up being back down in the sub $1.70 range. The automotive industry that had been trying to make up for the run on small cars now saw an up turn in large truck and SUV sales. The Toyota dealer with the Prius problem? You guessed it; he ended up having cars on the lot again. As Jackson said, it just goes to show how hard the buying public is to predict and the irony is that the experts talk about the car manufacturers needing to build the cars that the consumer want to drive. The question is how does a company plan for selling out of a small car in one quarter to having a surplus of the same car in the next quarter? Jackson’s point is that the car industry is a complicated animal. As the saying goes, “Hindsight is 20-20.”

In the end, the environmental and economical factor of small cars in today’s society isn’t what sells them. Their sales are directly related to the health of the economy and the price of gasoline. When people can’t afford to fill the tank, they will give up their large vehicles and opt for something that costs less than half to run. However, when times are good and gas is cheap, all of a sudden a small cars becomes the epitome of inconvenient.

Bottom line—the small car will end up being a necessity for the American auto industry. Why? Because people just can’t argue with cars like the Lightning Hybrid that is capable of achieving 100 mpg.

 

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