Friday, June 15, 2007

More Proof of Higher Gasoline Tax Will Work

This is some very interesting observations by the DesRosiers Automotive Consultants Inc.

Higher the gas price, higher sales volume of subcompact/compact cars.

Again, this proves the effectiveness of a Pigouvian tax on gasoline.

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Just did an update of our tracking of entry level vehicles sales (subcompact and compact cars and light trucks) relative to monthly gas prices. There is an amazing co-relation between the two. Virtually every month when gas prices go up, sales of entry level vehicle sales so up. And amazingly the opposite is also true, when gas prices go down during the month, sales of entry level vehicles go down as well. So we have a consumer that for months and months see fuel prices rising and the moment fuel prices do down, if even for a month, the consumer goes out and buys a larger vehicle. It is almost as is they are waiting for lower fuel prices to justify the purchase of a larger vehicle, historical tracking doesn't seem to matter.

This also makes a mockery of the Federal feebate program. Instead of the ill conceived Federal feebate debacle all Ottawa had to do was increase the price of fuel. Everyone would have been treated fairly, it would immediately result in more entry level vehicle purchases (see the chart) and all 19 million vehicle owners might drive less. I guess EFFECTIVE policies to address the climate change agenda are NOT part of any Federal politicians policy portfolio. They prefer to use policies that don't work and are unfair to many OEMs.


Dennis DesRosiers
DesRosiers Automotive Consultants Inc
Dennis DesRosiers
President
dennis@desrosiers.ca
80 Fulton Way Suite 101
Richmond Hill, Ontario
L4B 1J5

tel: 1-905-881-0400 - 13
fax: 1-905-881-7456
mobile: 1-416-543-8611
www.desrosiers.ca

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