Alexandria, VA - Even though retail gasoline prices are at a four-year seasonal high, historical trends suggest that consumers will continue to decide what type of vehicle to purchase based on utility, affordability, and efficiency, according to a report issued today by the Fuels Institute. Analyzing 15 years of market data, Driving Vehicle Sales – Utility, Affordability and Efficiency casts considerable doubt on the conventional wisdom that fuel prices are the primary consideration driving consumer purchasing decisions; identifies a clear market shift toward cross utility vehicles (CUVs) that is expected to continue into the forseeable future; and contains important considerations relevant to the just released proposed federal fuel economy standards.
“The notion that higher fuel prices lead consumers to purchase smaller, more fuel-efficient vehicles, while lower prices encourage the purchase of larger, less fuel-efficient vehicles is not supported by the data,” said John Eichberger, executive director of the Fuels Institute. “Consumers buy vehicles based on what they need and want and what they can afford. This combination has resulted in an overwhelming shift in the composition of the light-duty vehicle market to cross utility vehicles (CUVs). We expect sales of Model Year 2019 vehicles and beyond will reflect the market shift toward CUVs, and this continuing market shift raises important issues for policymakers to consider when setting federal emissions standards.”
The report identifies a major shift in the light duty vehicle market from 2003 through 2017 – the rise of the CUV, which grew its share of all vehicles sold from 10% to 35%, at a time when all other vehicle classes (except small cars) lost market share. Consumers are increasingly purchasing CUVs because this class of vehicle meets consumer desires for utility, affordability, and efficiency:
With Model Year 2019 vehicles set to soon hit dealer lots, the market shift toward CUVs is likely to continue, according to the Fuels Institute. In addition to satisfying consumer demand for utility, affordability, and efficiency, automakers favor CUVs, offering more than 90 different models in 2017, because these vehicles yield production efficiencies, lower manufacturing costs, competitive price points and aide compliance with fuel ecomomy requirements.
The report’s analysis of vehicle purchasing trends contains other important considerations for policymakers to consider when setting federal emissions standards, including:
“Unbiased, fact-based research is critically important to aligning policy objectives with market realities,” explained Eichberger. “This Fuels Institute report presents factual market data and provides an objective analysis of the relationship between fuel prices and consumer vehicle purchasing decisions, the major market shift to CUVs, and consumer interest in alternative vehicles that can help inform policymakers setting fuel economy standards and industry leaders considering long-term investments.”
The Fuels Institute, founded by NACS in 2013, is a non-profit research-oriented think tank that evaluates market issues related to vehicles and the fuels that power them, incorporating the perspective of diverse stakeholders to develop and publish peer-reviewed, comprehensive, fact-based research projects. The Fuels Institute is a non-biased organization that does not advocate.