Cy-Fair Edition | September 2022

TRANSPORTATION Elevated vehicle, gas costs affect Houston commuters, economy

DRIVING UP COSTS Demand for new vehicles since the start of the pandemic and low inventory due to part shortages have caused the average vehicle purchase price in Houston to increase.

Average cost of vehicles, Houston metro

June 2018 June 2019 June 2020 June 2021 June 2022

$36,765

$38,662

BY DANICA LLOYD

Additionally, Jankowski said interest rates could increase another one to two points or more this year, inflating the cost of financing vehi- cles with higher monthly payments. While demand bounced back, supply plummeted as manufacturers faced part shortages. Jankowski said nationwide there were 500,000 vehicles on dealers’ lots waiting to be sold in February 2020, and as of July that number had dropped to about 100,000. Lonnie Gipson, general manager of Northwest Dodge off Hwy. 290, said at many local dealerships, new inventory is already sold before it reaches the lot as customers are ordering vehicles ahead of time. “That’s why

+37%

$41,225

Houston-area residents may be see- ing more of their monthly expenses go toward transportation costs. According to Patrick Jankowski, senior vice president of research for the Greater Houston Partnership, factors may include the rising cost of vehicles due to low inventory and rising interest rates as well as a spike in gas prices starting earlier this year. “During the early stages of the pandemic ... you didn’t want to spend any money because you did not know if you were going to need that money further down the road, and people just stopped buying cars,” he said. Vehicle sales in the Houston metro dropped from 17,425 in March 2020 to just 9,657 the following

$43,867

$50,487

SOURCES: TEXAUTO FACTS, GREATER HOUSTON PARTNERSHIP/COMMUNITY IMPACT NEWSPAPER

FINANCING FUEL Gas prices averaged $2.69 per gallon throughout 2021, but the average price per gallon increased 54% from January to June this year.

Average gasoline prices, U.S. Gulf Coast

$5

In June 2022, the average gas price was $4.57.

+54%

$4

$4.09

$3

$2.04

$2.97

$2

$2.24

$1

Gas prices dipped as low as $1.53 in May 2020.

“I LOOK AT VEHICLE SALES AS A GOOD INDICATOR OF CONSUMER CONFIDENCE.”

SOURCE: U.S. ENERGY INFORMATION ADMINISTRATION/ COMMUNITY IMPACT NEWSPAPER

$0

Jan. 2022- July 2022

Jan. 2020- Dec. 2020

Jan. 2021- Dec. 2021

when you drive by those lots they’re empty because the factories are pushing them to order everything. They’re not giving

month, he said. But sales began to pick up again later that summer and drove prices up. According to

Gas prices As the summer vacation season has passed and high gas prices are resulting in fewer drivers on the road, gas prices should be leveling out, Jankowski said. According to the U.S. Energy Information Administration, the average price-per-gallon in the Gulf Coast region was down to $4.09 in July and is expected to reach $3.21 by December following a 54% increase in prices from January to June. “We entered the summer driving season with low inventories. Also, people were driving more so the demand was up. We had crude prices

spike, and those are probably the three biggest factors,” Jankowski said. The war between Russia and Ukraine interrupted exports of crude and refined products, which impacted prices at the pump. Jankowski said the U.S. has also lost refining capacity in recent years. “What we saw was companies that were in the refining business, they either converted their refineries to things like biodiesel or other prod- ucts. ... Others simply shut them down because they were no longer profitable,” he said. Mikah Boyd contributed to this report.

PATRICK JANKOWSKI, SENIOR VICE PRESIDENT OF RESEARCH FOR THE GREATER HOUSTON PARTNERSHIP

a TexAuto Facts report by marketing consultant firm InfoNation, the aver- age vehicle sales price in the region as of June was $50,487—up $6,620 from one year ago. “Initially, it was people getting caught up, and now people are feel- ing a little bit more comfortable about their financial situation and willing to take a 48- or 60-month note and buy a car,” Jankowski said. “I look at vehicle sales as a good indicator of consumer confidence.”

them any extra inventory; they’re just building their orders,” he said. Inventory should improve as vehicles become less affordable and supply chain issues are eventually resolved, Jankowski said. However, he said he does not anticipate signifi- cant change in the next six months. “You’re not going to find the perfect car, especially in this market. If it’s really close to what you want, don’t hesitate because it’s not going to be there tomorrow,” he said.

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CY-FAIR EDITION • SEPTEMBER 2022

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