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Old 07-03-2008, 05:37 PM   #30 (permalink)
fshagan
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Honda tried to enter the bigger car market ... good luck that they failed (anyone remember the Ridgeline truck?)

There's about a three year development cycle for new vehicles, so they have to bet long term. What we are seeing in the marketplace right now is unusual behavior that will not last forever.

People concerned about getting a higher mileage car are flooding the marketplace because of the dramatically higher gas prices. That population of people MIGHT grow if gas prices rise, but we are certain that it will shrink dramatically if gas drops back down to $2.50 a gallon. Oil at $80 a barrel could happen again, as the higher prices encourage more oil exploration.

As much as we might like to think the rush to higher mileage cars is out of some kind of altruistic motive, it is due mainly to higher gas prices. If they fall, so does the demand for high mileage cars.

In addition, the population that is resigned to driving low mileage cars will still need to replace their vehicles at some point; they should be buying now when prices are low, but that's not how human psychology works. When gas prices stabilize a bit they will buy another truck at a higher price.
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