- The Washington Times - Thursday, July 13, 2000

Gas-guzzling sport utility vehicles continue to be popular among car shoppers, despite months of high gasoline prices.

SUV sales have fallen slightly half of 1 percent in June but analysts say it would require sustained higher gas prices to change consumers' buying habits.

Car dealers sold 1.69 million of the popular vehicles in the first six months of this year, out of 9.09 million total automobiles sold. That's an increase from the first half of 1999, when consumers bought 1.5 million SUVs out of 8.5 million vehicles sold, according to the National Automobile Dealers Association.

Michael Robinet, director of forecast services for CSM Worldwide, an automotive market research firm in Northville, Mich., said gas prices haven't put enough of a pinch on consumers to convince them to stop buying SUVs.

"I still think the consumer perceives the current situation is temporary … . As long as that's the mindset, it's not going to alter vehicle sales in a major way," Mr. Robinet said.

Gas prices had fallen in much of the country by Monday, the Energy Information Administration reported. The national average was $1.593 per gallon of regular, compared to $1.681 on June 19, though prices on the West Coast remained high.

Gas mileage for vehicles considered SUVs varies widely, from the massive Ford Expedition (12 miles per gallon city, 16 mpg highway) to the comparatively pint-sized Toyota RAV4 (22 mpg city, 26 mpg highway), according to the Environmental Protection Agency.

"The bottom line is, it's going to take gas a long time at high prices for people to start adjusting," said Jim Hall, vice president of industry analysis for AutoPacific, a Southfield, Mich., an automotive production-analysis and marketing-consulting firm.

Mr. Hall added that if a consumer can afford to pay $44,000 for a Ford Excursion, for example, that person is probably not hurting from an additional $20-a-week gas bill.

He said the popularity of SUVs does not seem likely to wane.

"We live in a county where unless you live in Manhattan or San Francisco, size is not a penalty," he said.

"It's pretty obvious, if Americans are going to be more fuel efficient with cars, it's not going to be because of pricing," Mr. Hall said.

On the other side of the spectrum from SUVs, American consumers can now buy extremely fuel-efficient vehicles, relative to their pure gas-powered, heavier cousins.

Hybrid vehicles those that use a combination gas- and electric-powered engine have entered the market. Honda introduced its two-door, manual transmission-only Insight in December. It starts at $18,880.

Soon after, the company announced it would make 6,500 Insights instead of the planned 4,000, due to high demand. The car is difficult to make because of its design and because it is made of aluminum.

Honda has sold 1,546 hybrids this year in the United States, and company spokesman Andy Boyd said interest in the car has increased with the gas prices. It averages 61 mpg city, 70 mpg highway.

Dealers in the Detroit area received two to three calls per week about the Insight before gas prices shot up. Now they receive two to three calls per day, he said.

Consumers buy the car to be on the cutting edge of technology, for environmental reasons, or for fuel economy, he said.

Toyota began selling its version of the hybrid, the Prius, in the U.S. in June, starting at $19,995. The company has sold 37,000 in Japan since December 1997.

U.S. sales are projected at 12,000 a year, said a company spokesman. The Prius gets about 50 mpg in the city and 40 mpg on the highway.

American automakers are also working on hybrids and electric vehicles, but analysts said it will take awhile for the new technology to become mainstream.

"The real key to hybrid vehicles is displaying to the consumer the value equation," Mr. Robinet said.

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