SEMA eNews Vol. 12, No. 35, September 3, 2009

CAR Study: "Gasoline Prices Drive Powertrain Technologies"

The future direction of vehicle powertrains can be hard to gauge. While electric vehicles, hybrid electrics and the current gasoline engine are all part of the future, there are many factors that impact the production for automakers. The decisions that OEMs make in regard to vehicle powertrains significantly impact the specialty-equipment industry.

“Gasoline prices, no matter what anyone says, are what drives powertrain technologies,” said Brett Smith, assistant director of manufacturing, engineering and technology for the Center of Automotive Research (CAR). He made the comments during a recent SEMA webinar that revealed the findings of a multi-phased series of specialty-equipment forecasting reports conducted by SEMA and CAR.

Through the session, moderated by John Waraniak, SEMA vice president of vehicle technology, Smith explained that the fluctuation in gasoline prices has been a major challenge for automakers. What used to be considered seasonal spikes in gas prices have become more detrimental given the extreme change that gas prices are experiencing from season to season.

“The important and challenging thing for the auto industry is that the spikes in process have become exaggerated,” said Smith. “It is important to understand that [future] gas prices could be $2.00 a gallon or $7.00 a gallon, and as a vehicle manufacturer, that’s a real challenge.” 

Here are a few key findings from the study outlined by Smith.

The gasoline engine is not going away. Because of the fluctuation of gas prices and the impact they have on OEM plans for vehicle production, the study shows two projections for the total percent of light vehicles sold in 2015 with gasoline engines—one percentage for a gas price of $2.50 per gallon and another for a gas price of $6.00 per gallon. If gas is near the $2.50 per gallon, the total percent of vehicles powered by gasoline engines on the market is projected at about 95%. If gas increases to $6.00 per gallon, that percent of vehicles powered by gasoline engines declines to about 89%.

Diesel is not the current technology of choice. Smith says that diesel shows a lot of potential and real positive attributes, but it is not the technology of choice for the current administration. There still remain concerns regarding diesel emissions. And some of the attitude against diesel is due to the administration’s connections with California—a state that has been against diesel technology for decades.

Hybrid Electric Vehicles are part of the solution. The study’s forecast shows that by 2015, if gas prices were to near $6.00 per gallon, about 20% of the total number of light vehicles sold would be hybrid electric. However, if the price per gallon is about $2.50, that number falls to about 6% of the total number of light vehicles sold. Smith says that the increase in gas prices make a strong case for the consumer to actually invest in hybrid technology. He also says that a current concern for vehicle manufacturers is, for the most part, consumers discount fuel economy and they’re not willing to pay extra dollars for fuel economy. Data, over time, shows that instead of buying advanced, new technologies for fuel economy, the trend is for people to purchase a much more efficient small car rather than buy a fuel-efficient midsize car with an expensive technology.

To hear more results from Phase II of the SEMA CAR report, including more news on the future of diesel and the outlook for battery electric vehicles, download the entire webinar session.

About the study results: This survey of the report presents results of a targeted survey of powertrain experts from vehicle manufacturers, powertrain suppliers, powertrain engineering services firms and non-Government organizations. The survey was conducted during the second quarter of 2009. Seventeen individuals participated in the survey. The majority of the interviewees had engineering backgrounds and currently held positions of director or above, They were selected based on their wide range of expertise in both technical and market issues. This topic is highly complex in nature. As such, the Center for Automotive Research (CAR) believes there is only a very small group of individuals who are capable of responding to the specific questions asked. The data is presented as the mean of all responses. Statistical analysis of such a small sample is not helpful. All respondents had the opportunity to compare their estimates to the survey mean and make additional comments. There was generally minimal disagreement from the respondents upon review.

SEMA's Webinar Program: The SEMA webinar program brings the world-class business seminars featured during the SEMA Show right to your desktop. Different business-building sessions are constantly added to the program, offering members the latest insight and practices from today’s leading speakers.

All SEMA webinars are conducted live and are open to all employees of SEMA-member companies free of charge. To participate, all you need is a computer with Internet access and a telephone. All previous SEMA webinars are available for download. Learn more about SEMA webinars and view upcoming presentations.

 

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