Does America Want to Buy Fuel Efficient Cars?

There appears to be a debate on this question, which is puzzling to me. I think many people are mistakenly under the assumption that “small, fuel efficient” cars equate to miniature so called “smart” cars that we see every so often on the road and in Europe, as opposed to simply something other than a gas guzzling SUV or crossover vehicle. In fact, most sedans today are very fuel efficient.

Will U.S. consumers buy these cars? Well, that question has actually already been answered. As you can see from the chart below, the top 5 best selling cars in the U.S. get more than 30 miles per gallon on the highway, and #6 on the list isn’t too far behind:

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Comments

[butterflygo...:]

This is a much, much too simplistic analysis to really mean anything. Let's say that these cars represent the "average" car, so it is these cars that are expected to get 39 mpg by 2016. You conveniently mentioned highway mpg, which is significantly higher than the average mpg used for CAFE calculations. Take the Accord for example. You listed 31mpg highway, and I believe for the 4cylinder city mpg is 21. Take the average of city and highway and you get 26mpg overall. To get to 39 is a 50% increase. A 50% increase in 7 years? Are you kidding me?? The last time fuel economy was raised so much in such a short period of time was in the late 1970s under the Carter Administration. Manufacturers responded by significantly reducing horsepower and weight in their vehicles, which many people argue contributed to additional automobile fatalities. People do not buy cars based on fuel efficiency alone. If they did, then the last version of the Honda Insight (that got 60mpg) would have sold like hotcakes. However, it did not because it was a 2 seater with limited cargo capacity. People buy cars that are the best combination of performance, power, features, reliability, safety, and cost. Fuel economy is only one factor in the decision making process.

May 21 03:47 AM

[butterflygo...:]

This analysis is much, much to simplistic to really mean anything. Lets say these cars represent the "average" and are expected to achieve 39mpg by 2016. You conveniently use highway mpg, which is much higher than the average mpg used for CAFE calculations. The Accord you mentioned that gets 31mpg on the highway gets about 21mpg in the city. Take the average of the 2 and you get 26mpg. 39mpg is a 50% increase over 26mpg. A 50% increase in 7 years?? Are you kidding me? The last time fuel economy was raised so much so quickly was during the Carter Administration in the late 1970s. Manufacturers responded by significantly reducing vehicle horsepower and weight, which many argue resulted in additional highway fatalities. In fact, the NHTSA estimated that reducing the weight of passenger cars by 100 lbs. and keeping all other vehicle’s weight equal would result in about 300 additional highway fatalities per year. People do not buy cars based on fuel economy alone. If they did, then the original Honda Insight that got 60 mpg would have sold like hotcakes. Instead, it was a sales failure because it was a 2 seater with limited cargo capacity. Customers purchase cars that are the best combination of performance, fuel economy, features, safety, reliability, cost, and comfort. Fuel economy is only one of many factors in the decision making process.

May 21 03:58 AM

[bill blattner:]

My wife has a 2007 R350 and has 3600 miles on it, I will not buy her a car that will kill her. I have 20,000 miles on my 2 and half year old Chevy Avalanche and I will not give it up.
Those of us that are retired don't drive much, and we will continue to own safe cars.
What about Al Gore and his fleet of aircraft, and other rich airplane and gas and fuel gushing people. Its always NOT ME, this global warming is a joke, just wait till we have a major volcanic eruption like in the past, we will have 1000 feet of ice covering most of the US. Can't wait till we elect people that have their heads on strait. We need to have alternative energy but lets do it the right way. We have oil for over 500 years, will we run out, some day, but lets do this with intelligence, not try to scare the hell out of people. Lets drill and keep gas and fuel prices down, put additional on gas and fuel and have it pay for help in alternative energy, such a bunch of idiots, keep the poor poor so they get voted in, what a joke, some of use are not stupid and know what is going on.

May 21 08:18 AM

[bill blattner:]

the word TAX needs to be inserted after additional, sorry:

May 21 08:20 AM

[rstrader:]

Agree that the analysis is way too simplistic. The top two vehicles in sales volume are trucks and account for a HUGE chunk of the overall market. A more reasonable explanation of the list is that people buy what they need - irrespective of fuel economy - because they buy vehicles to solve a specific task (e.g. hauling material in trucks or people in cars.) Given that most vehicles within a usage class are nearly identical to each other in real fuel economy results, people will buy what they need and recognize what they must pay in terms of fuel costs as simply the cost of solving their tasks. Clearly, everyone would like to spend less on fuel and produce fewer emmissions - but I think that goes without saying. So, I would say most people buy vehicles based on need rather than on fuel economy - and these sales results demonstrate that.

May 21 08:29 AM

[Tdot:]

Well, 2008 was certainly a transitional year and may not be very representative of the "post economic crisis" attitude of Americans. 2008 started off in the first quarter looking a little flat, but fairly sustainable for auto sales. Economy was on the way down, but gas prices were fairly stable. It was in the second and third quarters that things really went south, with gasoline peaking at $4.50 a gallon - something Americans were not accustomed to in an otherwise flat or down economy. This spawned the mass "defections" away from large and sporty cars, trucks, and SUVs into whatever small car they could find, preferably from Japanese or Korean brands. With few exceptions, American brand cars, however fuel efficient, were bashed as fuel wasting dinosaurs, along with the trucks and SUVs. This perception was prevalent even through the congressional hearings in November. Since then, over the last 6 months or so, Americans have started to at least take a look at some American brands and finding that there are in fact some some fuel efficient models that are reasonably competitive with the Asians (notwithstanding the ongoing "quality gap" perception).

In any case, the 2008 year is probably not very representative as a sample - there were a lot of "special causes" that produced panic buying of some vehicle types, and not buying of others. Remember there was a time last summer and autumn when Asian hybrids were immediately and indiscriminantly snapped up, sometimes at sticker price plus bid premium, practically as soon as the delivery truck was sighted on the way to arrival at the dealership. This is characteristic of panic mood swing buying. Then gasoline prices subsided, and those hybrids stacked up on dealer lots like the trucks and SUVs. Something similar happened before - in the 70's and 80's, when Arab oil embargos resulted in gas lines and prices leaping to an unthinkable $1 a gallon. Folks bought tiny little $2400 Civics instead of $3000 Cadillacs, and it looked to be all over for the American brands. If we had sampled those years as a trend, and projected it forward, then one would think we would all be driving around in scooters and mini cars - perhaps rather like much of Europe.

But gasoline stabilized at around a buck, and Americans soon were bored with tiny, slow, "appliance" cars, and jumped to macho SUVs - as soon as stylish looking minivans became boring "soccer mom" family transportation. That said, the whole "consumer pickup" trend, with heavy duty trucks being used for commuting purposes, and carrying nothing more in the bed than an occasional weekend soccer bag (as opposed to true blue construction worker cargo haulin'), was probably also a bit of an anomaly. Something perhaps related to, or rather spawned by, the "grungy" mood of the 90's youth.

The next "big thing" in American personal and family transportation will be something - but probably not tiny cars. In a decent economy, Americans quickly get bored with dull lifeless cars, and want something that fills the needs, and something they can be proud to drive around. The automakers that come up with creative, stylish, exciting designs will thrive, and the others will fall further back and try to play catch up. Fuel economy will no doubt be a priority: reinforced and emphasized with every seasonal change, when the fuel blends shift to summer or winter, and the pump prices jump up and settle back as refinery supplies and gas station demands restabilize.

At the moment, Americans are still in shock from the economic disasters that really got entrenched about a year ago, bringing everything to a virtual stand still. It will take some time and inspiration to get Americans to get out of the malaise of the sick bed, pull up their bootstraps, and get back to work. Then the comeback really begins, and it will be a helluva ride. What Americans choose to be their "rides" may determine the future of the American Industry.

In any case, 2008 was more representative of what folks do when they are stuck with a big Pickup and SUV in the garage, along with the eldest son's "fast and furious" asian beater-mobile in the driveway; and then fuel prices double overnight. Panic, trade in the SUV for something - anything - that gets 30 mpg or more - even if it is used - just to get by until it turns around again. 2009 (at least the first half of it) will be representative of what folks buy when they are depressed and fearing for their job - if they are employed at all. We'll see what happens in the latter half, and in 2010.

May 21 09:14 AM

[mycargets52mpg:]

Americans react as rationally to price signals as anybody. Exhibit A: Full-size SUV sales and resale values during last year's gas price spike. The main point to keep in mind is relative fuel efficiency. Skipping the Suburban for an Equinox will save money at the gas pump. That Equinox will of course not do everything a Suburban does, but at some point the additional fuel cost will force needs and priorities to be reassessed. When gas hit $4, that point was clearly reached, and many consumers made rational decisions. An Equinox will of course be less efficient than a Civic, but that comparison probably was not valid at $4, given the underlying needs assessment. GM, Chrysler, and Ford had clearly banked on behavior as described by rstrader, but the evidence shows otherwise. At least Mulally and Lutz had the guts to openly endorse higher gas taxes to support their investment in fuel efficient vehicles.

May 21 09:55 AM

[slowdown:]

I don't know where you got your data - the Impala is rated at 32 and I have gotten as high as 34 on the highway. You must have taken the data for the SS version with a V8?

May 21 09:56 AM

[Jeff B.:]

People do like to buy fuel efficient cars -- but, especially when that fuel efficiency is combined with reliability, good performance and good value. The chart data is slightly out of date. Currently, the best selling vehicle in the US is the Honda Accord. It now outsells the Ford F150 & Chevy Silverado (and Camry).

May 21 10:07 AM

[Jons12:]

A higher gas/oil tax is the obvious solution. It nips the problem at the bud and everything falls into place naturally without complicated schemes. Consumers will demand more fuel efficiency, biofuels become more competitive as well as mass transportation.

Gas tax is not an evil word!

On May 21 09:55 AM mycargets52mpg wrote:

> Americans react as rationally to price signals as anybody. Exhibit
> A: Full-size SUV sales and resale values during last year's gas price
> spike. The main point to keep in mind is relative fuel efficiency.
> Skipping the Suburban for an Equinox will save money at the gas pump.
> That Equinox will of course not do everything a Suburban does, but
> at some point the additional fuel cost will force needs and priorities
> to be reassessed. When gas hit $4, that point was clearly reached,
> and many consumers made rational decisions. An Equinox will of course
> be less efficient than a Civic, but that comparison probably was
> not valid at $4, given the underlying needs assessment. GM, Chrysler,
> and Ford had clearly banked on behavior as described by rstrader,
> but the evidence shows otherwise. At least Mulally and Lutz had the
> guts to openly endorse higher gas taxes to support their investment
> in fuel efficient vehicles.

May 21 10:38 AM

[mastiff0:]

This is a perfect case of twisting data to get it to say what you want it to say. Yhe top two vehicles are trucks, and this has been true for years. The economy and high gas prices has not changed this. Do a search and look at the top 10 vehicles sold for the last few years, in 2006, in 2004, etc. It looks very similar to 2008 vehicles sold- trucks on top, followed by various generic compact,midsize, and large cars, and maybe an SUV or two. Even the fuel economy hasn't changed- the camry, civic, and accord were getting the same fuel economy in 2004 as they were in 2008. There might be data that shows that people making fuel economy as the most important criteria when buying a vehicle, but this data doesn't show it.

May 21 10:41 AM

[Pstoneki:]

I find it amazing how well GM and Ford did at marketing SUVs in the 1990s. I owned a Toyota Land Cruiser in the 80's and a 4Runner in the 90's. People thought I was nuts. 'Why would you want one of the those hulking vehicles' they would ask. I needed one for its 4WD capabilities. People who owned Chevy Blazers and Ford Broncos where asked the same questions.

Then, GM and Ford figured out that SUVs could be huge cash cows, especially when based on mature pickup designs whose development costs had been paid off. They spent huge sums convincing people that they couldn't live without the power, capability, and safety that only a huge 4WD, V8 powered SUV could provide. And people bought it in droves. Even if they didn't pull a boat, drive off road, or have 6 kids and 2 dogs.

My guess is the marketing machines at GM, Ford, Toyota, etc can sell the American public on buying anything the automakers want to sell. When they figure out how to profitably build high end fuel efficient small cars for the US market (like Ford, Toyota, VW, Mercedes Benz, Audi, and BMW do in Europe) they will start marketing and selling them in droves. And people will realize just how safe and fun to drive these cars are.

May 21 10:43 AM

[joey 116:]

Cars are an emotional purchase, we want what is stylish, useful to us and if it gets good mileage, that is great too. People WANTED large trucks and SUV's for years, toyota and nissan produce SUV's as large as a Suburban, nobody notes this anywhere because they are too busy bashing detroit. There is a lot of choice in the marketplace and consumers buy what they want. This is, after all, a free-market economy. The choice should be left up to the consumers, the fuel economy laws will do what most government ideas do, fail miserably. You cannot legislate science and engineering, cars are continuously evolving to be safer and more fuel efficient. If the government does anything, how about mandatory driver education, and a device that turns off the cell phone while driving, and blacks out the in-dash television screen. I wouldn't be so afraid to drive a small car on the highway if I knew the other drivers knew how to really drive.

May 21 10:44 AM

[slowdown:]

Again - skewed data - you can't compare the sales of a Honda Accord to a pickup truck. Two different markets. The point is that we all want fuel efficeint cars and trucks....but if conserving fuel means manipulating fuel prices and government incentives to force us to buy specific vehicles then it's wrong. Personally - I need a truck/SUV with towing capacity and one that will haul the family at the same time which is in direct conflict with the objective. If the objective is to reduce emissions and dependancy on foreign oil - then we need to be investing in alternative fuels.


On May 21 10:07 AM Jeff B. wrote:

> People do like to buy fuel efficient cars -- but, especially when
> that fuel efficiency is combined with reliability, good performance
> and good value. The chart data is slightly out of date. Currently,
> the best selling vehicle in the US is the Honda Accord. It now outsells
> the Ford F150 & Chevy Silverado (and Camry).

May 21 11:13 AM

[slowdown:]

Taxes are implemented for a reason and the reason cannot be to manipulate the purchasing decisions of the public. You want to clean the air up? Then put laws in place to keep ships out of our harbors that refuse to burn bio-diesel. Just that one piece of legislation would bring jobs back to the US because it would no longer be cost effective to import most of the goods that hit our shores.


On May 21 10:38 AM Jons12 wrote:

> A higher gas/oil tax is the obvious solution. It nips the problem
> at the bud and everything falls into place naturally without complicated
> schemes. Consumers will demand more fuel efficiency, biofuels become
> more competitive as well as mass transportation.
>
> Gas tax is not an evil word!
>
> On May 21 09:55 AM mycargets52mpg wrote:

May 21 11:22 AM

[User 158164:]

What a dope. Mileage is not the ONLY factor people look at. Look at your own data. If mileage was what people wanted, then why does the Camry outsell the Corolla?

This is really funny: "My guess is the marketing machines at GM, Ford, Toyota, etc can sell the American public on buying anything the automakers want to sell", yeah that's why GM's market share is way up, because they can make people buy stuff they don't want! Do they keep the sharp things away from you?

May 21 12:38 PM

[Pstoneki:]

No. There has been too much focus on GM. However, where else can you attribute the fact that they were able to convince soccer mom's to buy 20 foot long SUVs that handle poorly, are impossible to park, get terrible mileage, have poor fit and finish, and use technology from the 1980s? These people typically aren't pulling a boat or hauling around a bunch of kids. And they don't 'need' a vehicle that requires a ladder to get into. But they have been convinced they do.

GM and Ford are very good at selling this segment, even if the result is that people buy other manufacturer's cars in the segment instead.


On May 21 12:38 PM User 158164 wrote:

> What a dope. Mileage is not the ONLY factor people look at. Look
> at your own data. If mileage was what people wanted, then why does
> the Camry outsell the Corolla?
>
> This is really funny: "My guess is the marketing machines at GM,
> Ford, Toyota, etc can sell the American public on buying anything
> the automakers want to sell", yeah that's why GM's market share is
> way up, because they can make people buy stuff they don't want! Do
> they keep the sharp things away from you?

May 21 12:59 PM

[Tony Petroski:]

"Fuel efficient" is a relative term as is "gas guzzler." Is an M-1 tank a "gas guzzler" and therefore less efficient than a calvary man riding a horse? If I choose a Ford Explorer because the mix of size, durability and fuel use fits my needs, does that make me an enemy of the people?

People don't need to have their arms twisted to do what's in their interests to do. They need to be bribed (via subsidies) or forced to do what is not in their interest. Hence "green" vehicles that can't make it in the marketplace and therefore need the iron fist of government behind it.

Yeah, I know. Enemies of the people (like me) are contributing to "global warming." Damn right. Here in Minnesota, it is almost always damn cold.

May 21 09:21 PM

[Pstoneki:]

Hey Tony,

Makes sense to me. I'm from northern Minnesota myself. Actually pull a boat behind my SUV, drive offroad to go hunting, fishing, and canoeing, etc. I just wish someone could sell me something suitable that gets 50 mpg rather than 16. Like a diesel hybrid 4Runner. That would fit the ticket perfectly.


On May 21 09:21 PM Tony Petroski wrote:

> "Fuel efficient" is a relative term as is "gas guzzler." Is an M-1
> tank a "gas guzzler" and therefore less efficient than a calvary
> man riding a horse? If I choose a Ford Explorer because the mix
> of size, durability and fuel use fits my needs, does that make me
> an enemy of the people?
>
> People don't need to have their arms twisted to do what's in their
> interests to do. They need to be bribed (via subsidies) or forced
> to do what is not in their interest. Hence "green" vehicles that
> can't make it in the marketplace and therefore need the iron fist
> of government behind it.
>
> Yeah, I know. Enemies of the people (like me) are contributing to
> "global warming." Damn right. Here in Minnesota, it is almost always
> damn cold.

May 21 10:08 PM