Rising Oil Prices Could Trigger Worst Vehicle Sales Downturn in Decade

Situation:

• Oil prices surged to all-time high of $78.40/bbl
• Fears that conflict in Middle East could widen
• Some energy market analysts have said oil could reach $100/bbl
• Implies future US gasoline prices of $4/gal, up from just under $3 now
• US automakers already reeling from consumer flight from SUVs, trucks
  Now face risk that higher oil prices will trigger worst sales downturn in more than decade
  

Significant Points :

• High energy prices, weakening housing market, rising interest rates threaten economic growth, consumer confidence
  
• Economic growth less than 2% could tip auto sales into cyclical downturn
  
• Every $10 increase in crude oil drops US annual vehicle sales 200-400 units
  
• Aggressive sales incentives, discounts last 5 years have pulled demand forward
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• Click Here for Full Digest and Source Article:
  http://www.automotivedigest.com/view_art.asp?articlesID=19634
  

Sourced From: Reuters via Automotive News, June 14, 2006
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