19 January 2015

Over the past couple of weeks the falling price of petrol has been cited by ‘experts’ as one of reasons for increasing sales of petrol cars.

Now, at first glance, this sounds fine. But take more than a glance and two things come to mind. First,  the stats I’ve seen show the price of diesel is also falling. And secondly, I’m not sure the general public is naïve enough to believe that fuel prices will stay low forever.

Yes, there are some predictions it will stay low for the next year, possibly two. But the fact that oil is a finite resource means that scarcity will become a factor in the long term.

A more likely link, in my book, between falling fuel prices and vehicle sales is that as forecourt prices drop people are more likely to use the cars they have. Higher mileages are good news for the auto retail industry as it benefits both the service departments and also the sales departments as drivers are more likely to change their car; hence the one-stage removed link to improved overall registrations.

Interestingly, the move to petrol cars that keeps being talked about by experts has yet to materialise. The proportion of diesel registrations rose in 2014 compared with 2013. If there is a swing to petrols, it looks more likely to be in the form of petrol-electric hybrids, than purely petrol cars.

The question I have, is what’s happening on the ground? Are your service departments seeing increased business due to higher mileage? Or are people really going out and buying more powerful petrol cars because of low fuel prices today?

I’d love to hear you thoughts, so contact me at tristan@auto-retail.com.

Tristan Young

Tags: Blog, petrol prices, sales of new cars