Motorists watching gasoline prices climb should think twice about rushing headlong into a new vehicle purchase just to save money on gas, experts say. Here are some pros and cons. Newsday
Pro: You'll start saving money the sooner you make the switch, which will help to pay the cost of the new or used vehicle
Con: You might have to pay a higher price for that fuel miser, because as gasoline prices rise, so does demand for fuel sippers. "Most of us make our worst buying decisions in a panic situation," said author Jack Gillis of The Car Book, a consumer guide.
And there are — or soon will be — shortages of some vehicles made in Japan or containing parts from Japan because of the March 11 earthquake. Said Len Cafarelli, general manager of Huntington (N.Y.) Toyota, "The fuel-efficient cars are flying off the shelf." Gary Schimmerling, who owns Babylon (N.Y.) Honda, said he is short of Fit subcompacts and Insight hybrids, which are made in Japan. "I think you'll see prices will definitely go up because of the demand," he said.
Pro: Most Japanese models sold here, including about 80 percent of Hondas, are produced in North America, with mostly local parts, and although there have been some cuts in production at some North American plants, dealers say supplies of bread-and-butter models like Civic, Accord, Camry and Corolla are ample.
Rebecca Lindland, of auto consulting firm IHS Automotive, says models produced in Japan include Infinitis, most Lexuses, Acuras and some Subarus. "Where you'll find issues as a consumer is if you're very inflexible — if you insist on a vehicle having this color or this interior or this feature, because you're going to wait awhile if they have to order the vehicle," she said.
Con: You could take a big loss on the trade-in or resale value of your current vehicle during a time of rising gasoline prices if its fuel economy is below average. "Historically, a sharp increase in fuel prices has been followed by a decline in large, used SUV prices and, conversely, resulted in an increase in prices for used compact cars," Jonathan Banks, an analyst for the National Automobile Dealers Association Used Car Guide, said in a recent statement. But, noted Cafarelli of Huntington Toyota, you might lose even more if you wait. "As prices of gas go up, prices of gas guzzlers being traded in go down," he said.
Pro: Factory rebates and leases are widely available and interest rates are relatively low, said Lindland, although she adds that lenders still are being picky about things like credit scores.
Con: The nation's economy still hasn't recovered from the recession. Cheryl Mera, who runs a business in Melville, N.Y., that matches companies and professionals to barter goods and services, said she'd like a car that does better than her Nissan Pathfinder's 16 or 17 mpg, but business is too slow. "For me right now, a car would be a luxury," she said. Instead, she's driving less to conserve gas.
Some energy experts think the European financial crisis, the damage to the Japanese economy and rising fuel prices in themselves all could slow economic growth, which would reduce petroleum demand and prices.
It has happened before. "Gas prices will remain high until the situation in the Middle East is resolved," the Kelley Blue Book auto price guide said recently, "but consumers should only sell their current vehicle if their budget forces them to do so."