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The stock market was impacted Wednesday (March 16) as crude oil reached a record high while General Motors lowered its earnings outlook for the company’s first quarter and year-end.
CBS Marketwatch reported that crude traded as high as $56.35 a barrel, which eclipsed the former record of $55.67 a barrel set last October.
Earlier, crude oil prices retreated slightly after the Organization of Petroleum Exporting Countries (OPEC) agreed to boost production in April and said another increase could ensue if prices remain at current or higher levels.
In General Motors’ warning, the company cited declining sales and production volumes in North America, including a drop in sports utility vehicles.
With gas prices closing in on record levels and showing no signs of slowing, analysts feel car buyers are turning their attention away from costly SUVs and focusing on cars that are more fuel efficient.
Full-size SUV sales fell 21% last month, compared to a year earlier, and that’s after a 31% drop in January, according to new-vehicle retail transaction data from the Power Information Network, an affiliate of J.D. Power and Associates.
“Rising gas prices are certainly a contributing factor to this trend,” said Tom Libby, senior director of industry analysis at the PIN. “We’ve had two dramatic increases in gasoline prices in the past year, and that begins to have an impact on consumers.”
The study also showed that in the first two months of 2005, SUVs have sat on dealer lots an average of 84 days before being sold, while the industry average is about 66 days.
Paul Ballew, General Motors’ top sales analyst, tried to put the softer sales in perspective earlier this month following lower February results in the segment.
“We have a hard time finding evidence that full-size SUVs are in long-term decline and that the category is going to drop appreciably in the next few years,” he said. “It’s a combination of sales really outperforming for a couple of years, having some payback right now.”