KATRINA UPDATE: Hurricane clipped light-truck sales

Gasoline prices driven up in the wake of Hurricane Katrina along with depleted new-vehicle inventories at dealerships is responsible for a major decline in sales of larger sport utility vehicles (SUVs) and pickup trucks nationwide, according to research by J.D. Power & Associates.

“Dwindling 2005 inventory levels and rising gas prices have caused a significant drop in full-size SUV and pickup sales,” said Bob Schnorbus, chief economist for J.D. Power.

Overall, the SUV segment share of the retail industry declined from 30.1% on Aug. 1 to 25.7% by month’s end. That indicates a return to SUV share levels that existed before “employee” discount-pricing programs were launched by General Motors, Ford Motor Co., and DaimlerChrysler at the beginning of the summer, J.D. Power said. Sales of full-size pickups are also suffering, falling from 15.3% of all new vehicle sales for the first seven months of 2005 to 12.3% for August.

“But it’s clearly not gas prices alone that are causing these segments to experience a sales drop,” Schnorbus cautioned. “For gas prices to have a significant impact on vehicle sales, we believe two things need to happen. First, gas prices must rise above $3 a gallon and approach $4 a gallon, and second, prices must be expected to stay at those high levels for an extended period, perhaps a year or longer.”

Also according to J.D. Power, new-vehicle retail sales overall have plummeted in the areas hit hardest by Hurricane Katrina. They’ve dropped by 82% in cities affected by the storm, including, New Orleans and Baton Rouge, LA; Biloxi, MS; Mobile, AL; and Pensacola, FL. In the surrounding areas, including Atlanta, Houston and Miami, sales have dropped 19%.

“While the impact of Hurricane Katrina has been significant in much of the South, we do expect vehicle sales in those areas affected by the hurricane to recover, especially as people begin to replace vehicles destroyed by the storm,” said Tom Libby, senior director of industry analysis for J.D. Power.

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