SEMA eNews Vol. 10, No. 23, June 7, 2007

CONSUMERS MAY GIVE UP PERFORMANCE FOR FUEL ECONOMY, SAYS CONSUMER REPORTS

According to a recent Consumer Reports poll, facing soaring gasoline prices, American car buyers definitely want more fuel-efficient vehicles but may not be ready to give up size, range, performance or other amenities to achieve that goal.

The Auto Pulse survey, conducted by the Consumer Reports National Research Center, polled a nationally representative sample of 1,804 people via telephone April 26-30, regarding issues concerning gas prices and trade-offs they might be considering. Participants had to live in a household that owned at least one vehicle.

The survey came just three weeks before the national average gas price spiked to a record $3.22 per gallon of regular unleaded gas on May 21. That is $.326 more than at the same time last year, and nearly as high, after adjusting for inflation, as the all-time record set in March 1981.

Even before the surge, gas prices were already on the mind of the roughly one-in-five respondents who planned to purchase a new car during the coming year.

Among that group, nearly seven in 10 said they would seek a vehicle with better fuel economy than their current model. Nearly half would consider a diesel, hybrid or flex-fuel vehicle (the latter can run on gasoline, E85 or any gasoline-ethanol blend), whereas only one in nine primarily drive such cars now.

Car buyers were wary, though, when asked what they would be willing to sacrifice in order to achieve higher miles per gallon. A bare majority (52%) said they would give up vehicle size or capacity. Somewhat fewer would trade off range (49%), performance (48%) or amenities (44%).

Forty-two percent said they would be willing to pay more for a fuel-efficient car, and 31% would pay more for special fuel.

The answers reflect the challenge consumers face in a market filled with large, gas-guzzling vehicles where buyers seeking to improve fuel economy often must pay extra-typically about $3,000-$4,000 more for a hybrid model as compared to a similar conventional vehicle. Selection is also limited; survey respondents in the market for a car but who aren't considering a hybrid said selection and price were the main reasons.

Indeed, the survey revealed a desire to be environmentally responsible. Among all car-owning respondents, some 60% said they were either concerned or very concerned about the environment versus only 6% who said they were not concerned. Nearly three-quarters said they would drive more slowly, or even drive less, to conserve gas because of high gasoline prices.

But consumers also said gas prices would have to go even higher before they would make major changes in behavior. On average, car owners said prices would have to rise to $3.90 per gallon before they would "drastically" reduce their driving. The survey found that drivers in the West and those with incomes of $75,000 or more would resist gas prices longer; for them, it would take a price of $4.50 per gallon to spur dramatic change. Older people and those with incomes under $40,000 were more vulnerable; the majority said they would make drastic cutbacks in driving at an average price of only $3.50.

As consumers are faced with higher gas prices, they shift towards buying vehicles that will help save them money at the pumps. However, SEMA research finds that enthusiasts continue to spend money on specialty equipment in times of fluctuating gasoline prices even though vehicle preferences change.

Source: Consumer Reports. (May 24, 2007). "Consumer Reports Poll: Car Buyers Seek Fuel Efficiency, But Remain Wary of Tradeoffs." Consumer Reports press release courtesy of PR Newswire