ALEXANDRIA, VA – While auto sales forecasts support a bright future and consumer views of diesel fuel are improving, consumers ultimately will be the group deciding the fate of the diesel market — and their focus will be on economics more than any other issue.
A new consumer study released by the Fuels Institute, “Consumers and Diesel: Potential Conflict Between Fuel Economy and Cost,” examined consumer preferences toward diesel fuel and found that while all consumers seek economic benefits, different consumer segments value different economic factors, and that these different needs all must be addressed in communicating diesel fuel’s cost benefits.
With gasoline expected to lose market share over the coming decade in the United States, diesel fuel is poised to be the fuel most likely to experience growth.
“It is clear that forecasts support a bright future and consumer views of diesel are improving, but the future of the diesel market will rest on the ability of the auto and fuel retailing industries to educate consumer segments about the overall economic impact of diesel on their budgets,” said John Eichberger, executive director of the Fuels Institute, in announcing the results of the national survey of 2,007 gas consumers conducted by Penn, Schoen and Berland Associates LLC.
Consumer education from auto manufacturers may have already played a role in changing perceptions. Today, more than 4 in 10 (41%) new car buyers say that they would consider purchasing a diesel vehicle, a considerable increase from 31% who said so just a year ago, according to the study.
Central to diesel fuels’ success will be attracting female customers, who make 73% of all car buying decisions in the country, according to cars.com. In this respect, there has been considerable progress: the percentage of female consumers who said that they were likely to consider purchasing a diesel vehicle rose from 26% to 32% over the past year.
However, different perspectives on fuel economy and fuel prices will need to be addressed if the market is to grow to its potential, the survey found. Of all consumers who are likely to consider purchasing a diesel vehicle, fuel economy was cited as the top factor. Diesel vehicles are known to deliver 20% to 40% more miles per gallon than their gasoline equivalents, and consumers seem to recognize this benefit.
Just as compelling a story is why consumers won’t choose diesel — and economic considerations are also the reason. Just as the overwhelming number of consumers would consider diesel vehicles because of superior fuel economy, the more than two-thirds (68%) of those who would not consider diesel cite the higher price of diesel fuel.
Concern about retail diesel fuel prices is somewhat justified. From January 2013 through August 2014, diesel fuel prices averaged 40.7¢ higher than regular unleaded prices, according to the Oil Price Information Service (OPIS). The diesel price premium during this time period ranged from a low of 20.1¢ per gallon to a high of 64.6¢. Such a sticker shock at the pump could dissuade consumers from considering a diesel-powered vehicle.
However, the diesel fuel price premium averaged 11.6% higher than gasoline. At the same time, diesel fuel delivers an estimated 15.5% more energy content than E10 gasoline, which means that diesel delivers more energy per consumer fuel dollar which could translate into more miles per dollar spent.
“The availability of a diverse selection of diesel vehicles — and diesel fueling locations — will help pique consumer interest, but that interest must be supported by education about the relative value of the vehicle and the fuel as it compares to other alternatives,” said Eichberger.
On October 29, the Fuels Institute released the 32-page report, “An Assessment of the Diesel Fuel Market: Demand, Supply, Trade and Key Drivers,” which analyzed domestic diesel fuel demand, production capacity, international demand and trade balances, as well as the various programs and requirements that might affect overall diesel demand.
“Taken together, those two reports provide business leaders and policymakers with a better understanding of the diesel fuel market and its relationship to overall fuel demand and economics. Yet ultimately, as with all alternative fuels competing for market share, consumers will determine which products thrive and which do not,” said Eichberger.
Both reports are available for download at www.fuelsinstitute.org.
Founded in 1961 as the National Association of Convenience Stores, NACS is the international association for convenience and fuel retailing. The U.S. convenience store industry, with more than 151,000 stores across the country, posted $696 billion in total sales in 2013, of which $491 billion were motor fuels sales. NACS has 2,100 retail and 1,600 supplier member companies, which do business in nearly 50 countries.
The Fuels Institute, founded by NACS in 2013, is a non-profit research-oriented think tank dedicated to evaluating market issues related to vehicles and the fuels that power them. Led by a Board of Directors and driven by a Board of Advisors, the Fuels Institute incorporates the perspective of interested stakeholders affected by this market, including fuel retailers, fuel producers and refiners, alternative and renewable fuel producers, automobile manufacturers, environmental advocates, consumer organizations, academics, government entities and other stakeholders with expertise in the fuels and automotive industries.