BusinessReport.com

Blanchard Trailer Sales in Baton Rouge sells travel trailers, RVs, mini-motor homes, pop-up campers and other similar vehicles. After the 2005 hurricanes, business was great. But Hoytt Adcock Jr., the company’s vice president, knew the boom times wouldn’t last forever.

High-end dealerships that cater to a wealthy clientele have yet to feel the pinch from $4-a-gallon gasoline, but that’s not so for merchants in the middle of the market.

This year, Adcock says sales are down about 20%, and he expects the slump will continue as long as gas prices hover near record highs.

“This is a roller-coaster business,” Adcock says. “We’ve been in it for over 40 years. We’ve been through oil embargoes, we’ve been through the highest interest rates we’ve ever had in this country. You just have to tighten up your belt and get through a time like this and get prepared for the good times.” For now, they’re advertising more, getting out in the community and doing what they can to drum up sales.

Blanchard deals primarily with the starter segment of the RV business, not so much the high-end models, where the market is stronger. When gas prices rise, middle and working class consumers feel the sting more than anyone, and that pain is reflected in their vehicle-buying patterns.

The average price for a gallon of regular unleaded was $3.758 in Baton Rouge on May 23, according to AAA, and prices continue to set records nationwide almost daily. It’s worth noting that gas is actually rather cheap in the United States compared to most industrialized countries; across Europe, drivers routinely pay the equivalent of more than $8 a gallon.

But Americans have grown accustomed to lightly taxed, cheap gasoline, and an extra dollar or two per gallon is putting a strain on a lot of budgets, with a mixed effect on automakers. American car companies have begun to pay the price for leaning so heavily on trucks and SUVs, which tend to get lower gas mileage; General Motors, Ford and Chrysler all saw double-digit drops in April in U.S. sales compared to last year. However, national sales of trucks and SUVs, while down for some models, have not plummeted across the board. The GMC Yukon has done well, with a reported 36% increase in sales, while the once red-hot Ford Explorer is in a free fall. Nissan, Toyota and Honda all reported an overall uptick in sales for April.

Trucks and SUVs have been especially popular in Louisiana and have comprised more than 60% of automobile sales in the United States in recent years, according to Bob Israel, president of the Louisiana Automobile Dealers Association. He says the immediate response of the American automakers to record gas prices was to lower the prices on the worst guzzlers, which only goes so far. Traditionally, the domestics have been known for trucks and larger vehicles, while the imports focused on smaller, more fuel-efficient cars. Today, all the major manufacturers make a wide variety of vehicles, but Israel says the domestic companies have to change the public’s perception.

“The fact of the matter is, the domestic manufacturers make just as many fuel-efficient models as the Hondas and Toyotas do. But it’s not the first place you think of going to shop for those,” he says. Only in recent weeks has Israel noticed a concerted effort by the domestics to promote their higher-gas-mileage vehicles, perhaps due to simple stubbornness or because their production levels can’t be shifted quickly.

Toyota has been out in front with their hybrids, but GM, for example, is now spending billions on hybrid technology. Israel says consumers are starting to see hybrid versions of all their favorite vehicles.

“That is going to make the hybrid more popular, because you don’t have to buy an ugly car to get a hybrid,” he says.

Eric Lane, vice president of Gerry Lane Enterprises, says he hasn’t seen much difference in sales of full-size vehicles. If you need to drive four kids around, you need a big ride, regardless of the price of gas. Sales of expensive vehicles haven’t necessarily been impacted either; he says H2 sales are the same as last year.

“People don’t buy a Hummer for gas mileage,” he says. If you can afford to buy one, you can afford to fill it up. The biggest difference he’s seen is in the midsize, rear-wheel-drive SUVs, which people are trading in for midsize cars that get upwards of 10 more miles per gallon.

“Cars for years have been dead. People wanted an SUV,” Lane says. “Now, they’re making a move back in the car direction because the gas mileage is better.” He says he’s only sold six Chevy Trailblazers so far this year, when he used to move 10 a month.

Most people need their automobile. But other vehicles, like boats, are luxury items. Sam Kimbrough, who owns Thomas Marine in Gonzales along with his wife Joan, says his sales are down about 40%.

“I’m still selling the high-end stuff,” he says. “The larger boats, the more expensive boats are still selling.” But the working man doesn’t seem to be buying boats this year. Kimbrough says he started noticing the slowdown in November, which is typically a slow time, “but this year didn’t start.”

Some of his woes are no doubt due to greater competition from the likes of Cabela’s nearby, but he believes high gas prices are a major culprit as well, and doesn’t think there’s much he can do to boost sales. It may be that many people have simply decided burning gas when you don’t absolutely have to is no longer a luxury they can afford.

As the LADA’s Israel puts it, “People are realizing that gas prices are not going back to $2 a gallon any time soon—or ever.”