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The national average for a gallon of regular unleaded gasoline jumped 88% from January 2021 to May 2022 ($2.42 – $4.55), driving a shift in consumer new vehicle purchasing patterns. Specifically, the propensity of return-to-market households with a full-size luxury utility in the garage to acquire a similar vehicle dropped from 46% in January 2021 to 32% this past May. This inverse relationship between retail gas prices and loyalty to full-size luxury utilities is most pronounced for the Range Rover, Range Rover Sport, Cadillac Escalade, Cadillac Escalade ESV, and Mercedes-Benz G-Glass.
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Surprisingly, the relationship between gas prices and the BMW X7 is actually a positive one, implying that over the past seventeen months, as gas prices have climbed, BMW X7 owners’ loyalty to the segment rose modestly. Other BMW-related marketing actions may be influencing these findings.
Additional segments suffering a decline in loyalty concurrent with gas price increases include the midsize van and half-ton pickup categories. The latter is particularly significant given that the domestic manufacturers’ share of this segment was 92% during the relevant time period, based on total new light vehicle registrations, and it is commonly accepted that the domestic manufacturers derive an outsize portion of their bottom-line profits from this category. Household purchase and migration patterns in this segment are also noteworthy because this category accounted for 9.4% of all new light vehicle registrations in the January 2021 – May 2022 time period versus just 2% for midsize vans and 1% for full-size luxury utilities.
Sources: S&P Global Mobility, EIA.gov (Energy Information Administration)
Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.
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