Case - Demand for Gas Guzzlers
In fall 2005, Hurricanes Katrina and Rita churning in the Gulf of Mexico damaged oil rigs and refineries, contributing to a spike in oil prices. Many observers expressed confidence that those events were the long-expected trigger that would kill off demand for SUVs and other gas-guzzling vehicles.17 They were only partly right. In the months leading up to the hurricanes, sales of SUVs had already been falling, according to data from Automotive News. Automakers had been shifting ad dollars away from these products. CNW Market Research said that in August 2005, consumers had for the first time placed fuel economy ahead of performance when ranking factors for choosing a new vehicle.
When gas prices approached three dollars a gallon in September 2005, marketers felt sure that fuel economy would remain a top concern. Advertisers began creating more ads featuring vehicles' gas mileage. But by the end of the year, attitudes were shifting again. The National Automobile Dealers Association surveyed consumers visiting its Web site for information about car purchases, and it learned they ranked price as most important, followed by make and model, then performance. Fuel economy ranked last, with 3 percent considering it most important and 11 percent considering it least important.
What's a carmaker to do? General Motors gathers data from the shoppers who visit Web sites such as www.kbb.com to look up information, and it is analyzing the data to identify the price of fuel at which car buyers adjust their priorities.
Questions
1. From the standpoint of an automobile company, what sources of information in this article offer secondary data?
2. Suggest two or three other sources of data that might be of interest to auto companies interested in forecasting demand.
3. Online or at your library, look for information about recent trends in SUV purchases. Report what you learned, and forecast whether SUV sales are likely to recover or continue their decline. What role do gas prices play in your forecast?