How Do Oil Prices Affect the Auto Industry?

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Oil prices can heavily influence the auto industry – and it’s pretty obvious why. If petrol or diesel costs rise, people may be less inclined to buy a car.

After all, they are having to spend more of their disposable income on fuel. But what other ways do oil prices affect the motor sector?

 

Types of Car

Obviously, some cars cost more to fuel than others. Large vehicles like SUVs and trucks, for example, are usually more costly to run than motors powered by smaller engines.

If petrol and diesel rates soar, investment in the former may wane. And this could hugely affect overall sales for its manufacturer.

Motors with smaller tanks, however, tend to be cost-effective in almost any economic landscape. Even if oil prices rise, most of us would prefer to keep our car.

Very often, this is largely because a personal vehicle offers a private, and often quicker, alternative to public transport.

 

Industry Standards

Oil prices have always fluctuated. For a long time, there was little that manufacturers could do to tackle this issue – but technology is helping to change that.

You may have already heard about hybrid vehicles. This kind of motor is typically run by two different power sources: an internal combustion engine and electric generator.

As it’s designed to alternate between power types as speed increases, it offers a higher level of fuel-efficiency than most traditional motors.

Its promise of relatively low fuel costs has inspired many SUV and large vehicle manufacturers to offer a hybrid option to customers. Specialists like Imperial Car Supermarkets, for example, guarantee this benefit with every vehicle.

So, fuel-efficiency, thanks to technology, has become a key industry standard – and it’s largely down to the effect of varying oil prices.

 

Vehicles of the Future

True, hybrid cars can help drivers to reduce how much they spend on fuel. But if oil prices rise, owners will still need to pay more to get around – and this is hardly ideal.

Electric vehicles, however, could hold the solution. This is because they require no oil at all to be operated. Typically, they’re powered by rechargeable batteries.

Primarily, their purpose is to cut fuel emissions – but they also offer a more affordable way to drive, as EVs cost less to repair and power than classic models.

The former costs around £4 to drive for 100 miles, whereas the same mileage in a non-electric car has an average price of £15.

Though they still only contribute a small amount to the UK car industry, this will most likely rise, as public awareness around climate change grows.

Oil prices continue to affect the auto industry in various ways. It isn’t just the kind of vehicles we’re buying that’s changing – it’s how much they’re costing us in the long run, too.

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