Wednesday, January 26, 2011

Green for Green: The Truth About America’s Car Buying Habits


At the Society of Automotive Analysts' (SAA) 2011 Automotive Outlook Conference in Detroit, J.D. Power released some statistics on U.S. light vehicle sales in 2010. The figures make an interesting reading.

86% of vehicles sold were gasoline-powered, 8.7% were flex-fueled, 2.6% were diesels and 2.4% were hybrids. Their forecast for 2020 is perhaps even more stunning. An estimated 71.5% of vehicles sold will be gasoline-powered, 10% will be flex-fueled, 9.5% will be hybrids and just 1% will be pure electric.
More than seventy percent will be gasoline powered in 2020? Whatever happened to my Hydrogen-7 or Tesla Model S? As Rebecca Lindland, Director of Strategic Review for IHS Automotive explains, nothing.

"We studied the 1970s and we looked back at the last couple of oil crises, and we found that the [American] consumer will buy small, more fuel-efficient cars for literally three to four months. And then three or four months later, we go right back to buying big cars. It's just a pattern." 

When gas prices dropped from $4 a gallon back to less than $1.75 a gallon in early 2009 (see EIA's chart below), buyers simply lapsed back into their old buying habits. It’s one of the reasons trucks / pickups outsold cars in 2010. Lindland elaborates:
"It doesn't matter that there's over 30 new hybrid models on the market. [American consumers are] not buying them."
Most of the auto industry’s hopes lie with Generation Green, the first of which will probably be buying their first car in 2012. Lindland explains why Gen Green are so important:

"They're going to be the first generation to always have a hybrid or electric vehicle as one of their buying choices. They won't have to adapt their buying behavior. These are vehicles that they will have grown up with, and they will have never known a market without them."
It’s not all sunny, however. Jeff Schuster, J.D. Power’s Executive Director, said things such as price premiums, range anxiety and a lack of recharging infrastructure are still hurdles that hybrid and electric vehicles are yet to cross.
"You can read all the stories about how we don't typically drive more than 30 miles in one direction anyway, but the reality is that people want that security," said Schuster. "They want to know they can go further with the vehicle."

Regardless of what consumers want, increasing CAFE standards mean more hybrids; EVs and subcompacts are on the way. Lindland is especially fearful of a reprise of the ‘70s where tougher fuel economies drove carmakers to build “vehicles that nobody wanted” Here’s looking at you, AMC Pacer.
Others though are optimistic. Carlos Tavares, Nissan’s Executive VP and Chairman of Management Committee-Americas (we swear we didn’t make that up) recalls the debate of bringing the Versa stateside. The subcompact sedan and hatchback now commands 20% of the market segment.

"I think at the end of the day, the only thing to be said is let the American consumer decide," said Tavares. "We'll bring the products. We will continue to bring compact cars, and we will eventually reinforce our presence in compact cars, because today nobody can bet on the fact that oil is not going to go up."
So it just goes to show: while we all say we’re concerned about the environment, maybe all we really care about is what’s left in our wallets. It’s a tough reality, but maybe one the world will have to face sooner rather than later. Let us know your thoughts in the comments section below.
By Tristan Hankins
Source: Industryweek



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