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Higher Gas Prices Don't Change Buyers' New-Car Choices Much

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Fuel efficiency is making news headlines lately, with new-car sales achieving record high fuel-economy numbers in the U.S. (and in the U.K. as well).

But a survey of car buyers last month by industry analyst AutoPacific seems to contradict the idea that high gas prices are leading buyers to change the cars they choose.

According to the company's Fuel Price Impact Survey, just 18 percent of buyers say they will change to a smaller type of vehicle due to high fuel costs--from a crossover to a sedan, for instance, or from a mid-size sedan to a compact.

Fully 76 percent plan to stick with their current vehicle type.

Not even at $10/gallon

And for 42 percent of buyers, even a gasoline price of $10 per gallon wouldn't be enough to get them to change the type of vehicle they intend to buy.

To accommodate rising fuel prices, families cut other types of discretionary purchases. Drivers also travel less--combining trips, for instance--and reduce their speed on the highway when they do drive.

This all goes to prove that car buyers have pretty firm ideas about the kind of vehicle they need and want, and it's very hard to persuade them otherwise.

But it also highlights a common fallacy: that high gas prices will cause a wholesale shift into smaller cars.

Gas prices, San Francisco, CA

Gas prices, San Francisco, CA

Enlarge Photo

Small cars coming slowly

While automakers like Ford point to data showing compact cars and crossovers as the largest market segments, those shifts are evolutionary.

And, to be fair, there's been quite a lot of bracket creep in recent years, meaning today's "compact" car might have been considered a mid-size car 10 or 15 years ago.

But U.S. car buyers want to have their cake and eat it too: Most car buyers expect new cars to offer better fuel economy, and models with sub-par EPA ratings for gas mileage get penalized in the market.

Rules to raise MPG

Which is why, in the end, the only practical way to improve the fuel economy of new cars is to legislate it--as the NHTSA and EPA jointly did for 2012-2016 models in 2009.

The next set of corporate average fuel economy rules, covering model years 2017 to 2025, are expected to be issued sometime later this year.

Most economists agree that higher gas taxes are actually a more efficient way to sort out the market, but despite support from industry executives, that idea is a non-starter politically.

Will higher gas prices lead you to choose a different kind of vehicle next time you buy?

Leave us your thoughts in the Comments below.

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Comments (15)
  1. Yes, high gas prices made my mind up for me in the 70s, and reinforced that promise I made myself in 2006 when gas prices hit over $4.00 a gallon. When an electric car came out, even if it wasn't made by Ford, it would be my next purchase. I am so sick and tired of these roller coaster gas prices and I do not want to stop at another gas station for the rest of my life to purchase an over priced gallon of gas. I don't care if an electric car only gets 1 mile per charge, when it is time to get rid of my Mustang, its replacement will be an electric car.
     
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  2. James,

    Take a couple of hours off one afternoon and go test drive a Nissan Leaf and a Chevy Volt. You probably won't want one since they aren't a Ford like your Mustang but if I had to guess you will start realigning your priorities and put something electric in your drive way in the near future(perhaps a Focus?). It's such a nice drive to have no engine noise or vibration and running costs are so much cheaper. Just be prepared to want one after you drive one. It's pretty astounding.
     
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  3. Please. If people don't want a product, they must be forced to buy it? Isn't that a bit Stalinist? Let's apply that to all other products as well -- food, houses, apartments, clothes, TV services, computers, etc etc. Well... Why should some people (gov't bureaucrats) force other people (defenseless civilians) to do, or don't do, one thing or the other?
     
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  4. @Anton: Perhaps I wasn't clear. U.S. car buyers do appear to want better fuel economy (it's now one of the top 10 influences on purchase decisions). They just apparently don't want it to cost anything or change any characteristics of the vehicles they buy.
     
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  5. "They just apparently don't want it to cost anything or change any characteristics of the vehicles they buy. "

    Used to have a manager that would want me to fix problems with our products without changing anything. He didn't seem to understand that it is literally impossible. If you don't change anything, you can fix anything.
     
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  6. CAFE rules don't "force" anyone to buy anything. It is a system that encourages manufacturers and buyers to move toward more fuel efficient vehicles.

    It is the same with your refrigerator that is now 3 times more efficient thanks to the EnergyStar program and great engineering at appliance manufacturers.

    Do you feel like the government "forced" you to buy an efficient refrigerator? Do you think your life is worse off with a more efficient refrigerator?
    No, of course not. The new refrigerators work fine, the price is good, it was well managed by EnergyStar.
     
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  7. Nobody is forcing anyone to buy a certain type of vehicle. That's the whole point of regulations. Regulations set specific boundaries or limits on performance: pollute no more than "X" amount; be able to go "Y" miles on a gallon of gas/diesel; etc.

    Nowhere in these regulations are their requirements on HOW to comply. Any industry (in this case, automakers) are free to solve the problem by any one or more methods. The law has no interest in establishing "how". All that matters is that the regulations are met.

    These regulations establish necessary limits on the damage we do to ourselves. This is damage that doesn't manifest directly in up-front costs such that the Almighty Free Market can protect us.
     
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  8. 2nd paragraph: "there", not "their"
     
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  9. "But it also highlights a common fallacy: " that what people say in a survey will actually reflect their real world behavior. As the failure of "conjoint analysis" has shown, all the well meaning questioning in the world means nothing unless people actually put down money.

    Does anyone really believe that 42% of buyers would keep to the same size vehicle with gasoline at $10/gallon? Not very likely and there is no data to support that position. I am talking action, not people saying what they would do.

    Also, doesn't the Euro experience tell us that high gas prices lead to more fuel efficient cars even without CAFE.

    I think both CAFE and high gas prices have an impact. Industry surveys, no so much.
     
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  10. Well, obviously, if you have a sizeable family, you don't have much choice for at least one of your vehicles - it will have to be big. Right now, big is a guzzler since there are no family-size hybrids larger than the just-released Prius V and the soon-to-come Ford C-Max and C-Max Energi. I don't know how big they are internally, but they definitely look much smaller than the modern minivan. Still, sales records show that gas prices do have a signficant effect. Going for a more efficient power plant for the same vehicle (a turbo 4-cyl instead of a V6) also makes a difference.
     
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  11. I am not a fan of gas taxes. Just more self-destructive tax policies by screwing over all of us that have to work for a living (the 99%, for example). Supply and Demand are quite clear on the fact that gas/diesel will continue to rise painfully fast, without any increase in existing gas taxes.
    For the same reason, I am not a fan of a carbon tax. Amusing how the powerbrokers and wealthy tout a carbon tax (it won't hurt them one bit), but again will just grind the economic heel harder into the faces of the rest of us.
    A cap-and-trade system is necessary. It worked, and still works, dramatically well for curbing acid-rain related emissions. We need the same for the other emissions. There is plenty of money to be made and to fund improvements, while any remaining costs are not, cannot, be passed onto the consumer in any substantial ammount due to economics.
     
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  12. So the customers say they will not change their behavior even if gas prices are $10/gallon. On the other hand, the economists say that they will. Wonder who is right.
     
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  13. Well, it didn't take long for seemingly conflicting survey data to show up.
    http://www.thecarconnection.com/news/1075520_be-honest-is-fuel-economy-a-big-deal
     
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  14. "Lies, d--n lies, and statistics", right?
    You might be interested in the tone in which the BBC remarked casually, in a report on an uptick in the average fuel efficiency in the UK: "The changing consumer behaviour is closely linked to rising fuel prices, as well as to tax and insurance costs, which are higher for thirsty and powerful cars that generally emit more CO2 than smaller models."

    The European model has been that both the price of gas _and_ government incentives work together to encourage the purchase of fuel efficient vehicles. Translation: they tax sippers heavily, and guzzlers punitively. So the guzzlers in effect subsidize the sippers. It's how they are already at 130g/km.
     
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  15. Sorry, here's the link to the BBC report: http://www.bbc.co.uk/news/business-17740356
     
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