High Fuel Prices Likely to Impact Vehicle Type Before Powertrain

Since 2005, AutoPacific has conducted a bi-monthly online survey designed to measure the impact of fuel prices on consumers’ vehicle purchase decisions and driving behavior. The Fuel Price Impact Study (FPIS) puts years of trend data to work to understand how consumers react to fluctuating fuel prices and how the impact has changed over time.

Consumers are Often Reluctant to Change Vehicle Type

Historically, AutoPacific’s data have shown vehicle owners to be very tied to their current vehicle type. Whether a luxury brand owner or a mainstream brand owner, next vehicle intentions often mirror the current vehicle, or at least remain in the same macro category (car, truck, SUV, minivan).

“Lifestyle and family dynamics dictate vehicle segment, and for many, that means they’re locked into a specific vehicle type for 5-10 years,” says AutoPacific president and chief analyst, Ed Kim.

Independent of fuel prices, AutoPacific’s Future Attribute Demand Study (FADS) asks respondents what type of vehicle they intend to purchase next. While current luxury brand car owners are slightly more committed to their current segment, more than 70% of all current owners intend to stay within the same macro segment, with the exception of Mainstream Large SUV/XSUV 2-row owners, who may be more likely than other SUV/XSUV owners to migrate to a car or truck next time.

Whether a luxury brand owner or a mainstream brand owner, next vehicle intentions often mirror the current vehicle, or at least remain in the same macro category.

What happens when fuel price is added to the mix?

When asked about the impact of fuel prices on their next vehicle type and powertrain intentions in AutoPacific’s bi-monthly FPIS, only 24% of current luxury brand owners and 21% of current mainstream brand owners say higher fuel prices would change their next vehicle type. The catch? Fuel prices must increase approximately $1.25/gallon from where they are now for that to happen. Respondents are more likely to change powertrain type, but at a higher fuel price than for vehicle type. Current luxury brand owners say it would take a fuel price of $5.96 per gallon (median) for them to change powertrain type – a $1.86/gallon increase over the price they’re currently paying. Numbers are similar for current mainstream brand owners, who would change powertrains at a price $2.05/gallon higher than what they’re currently paying.

Respondents are more likely to change powertrain type, but at a higher fuel price than for vehicle type.

“Right now, a relative lack of alternative powertrain choices within vehicle segments means that it’s often easier for a consumer concerned with fuel economy to stick with a gasoline engine and migrate to a more efficient vehicle type,” says Kim. “The ease of transition and comfort level with a different powertrain technology remains a challenge for the auto industry that only time can rectify.”

Healthy SUV Growth Forecasted Despite High Fuel Prices

SUVs, large or small, are here to stay, despite rising fuel prices. AutoPacific recently asked over 300 current SUV owners how high fuel prices would affect their next vehicle purchase decision. The survey, issued bi-monthly to AutoPacific’s proprietary panel of respondents, is designed to gauge consumer reactions to fuel prices over time. Findings reveal that current high, or higher, fuel prices would cause the majority of current SUV owners (45%) to consider a hybrid or plug-in hybrid (PHEV) SUV or Crossover, while 27% would consider an EV SUV or Crossover, and 29% would be unaffected. “Most new traditional gasoline SUVs get much better fuel economy now than they did when fuel prices spiked in 2008 and caused a shift in the market,” says AutoPacific President and Chief Analyst, Ed Kim. “Couple that with an influx of hybrid, PHEV and EV SUV offerings and consumers have so many choices that they don’t have to downsize or change vehicle types.”

Current SUV owners would prefer to consider an alternative powertrain SUV or crossover than downsize or change vehicle types.

Alternative Powertrain SUV Market Share Growing at a Higher Rate than Overall SUV Market Share

According to AutoPacific’s annual forecast of U.S. light vehicle sales, SUVs will continue to dominate the market, reaching over 60% market share in 2027. Additionally, AutoPacific’s most recently issued forecast shows SUVs will make up over half of alternative powertrain market share in 2023 and beyond, and alternative powertrain SUVs will account for over a quarter of the total market by the end of 2027. “While SUVs continue to take over the new vehicle marketplace, alternative powertrain SUVs will continue to make up more of those SUV sales,” says Kim. In 2021, alternative powertrain SUVs made up 16.4% of total SUVs sold in the U.S. By 2027, AutoPacific expects they will make up 42.6% of all SUVs sold, giving SUV shoppers many options from which to choose.

Alternative powertrain SUV share of the overall market is growing at a faster rate than overall SUV market share.

Latest AutoPacific Forecast Shows a Gloomy 2022, But Share of Higher Priced Segments Grows

Due to continuing supply chain issues that remain a major impediment to industry sales recovery, AutoPacific is expecting an underwhelming 2022 with total U.S. light vehicle volumes at about 15.5 million units. Consumers can expect continued low inventories at dealerships and dealer markups resulting in higher transaction prices, and rising interest rates will have further negative impact on their purchasing power. “As transaction prices rise, people who are acquiring new vehicles during this time are likely to be more affluent, so market share of higher priced segments, such as Luxury SUVs and Pickups, is forecast to grow this year even as supply remains constrained,” says Kim.

Survey Finds High Fuel Prices Won't Deter Summer Road Trips

AutoPacific recently investigated the road trip plans of drivers in the U.S., finding that nearly half of respondents (49%) plan to take a road trip/driving vacation within the next six months and another 16% are considering taking one.

Collected from 644 respondents in May of 2022, the findings are a part of AutoPacific’s bi-monthly Fuel Price Impact Survey, designed to gauge consumer reactions to fuel prices over time. “People are traveling again,” says AutoPacific president and chief analyst, Ed Kim. “As COVID restrictions continue to wind down throughout the U.S., consumers are ready to get out into the world again and road trips are a great way to ease back into it.”

Current High Fuel Prices Have Little Effect on Road Trip Intentions

At the time that the latest survey was in the field, the national average price at the pump for regular grade gas was $4.60 per gallon according to AAA (https://gasprices.aaa.com), and AutoPacific’s survey respondents reported paying a similar price of $4.58 per gallon. Of those who said they plan to take a road trip, when asked if recent fuel price increases changed their travel plans, only 2% of respondents said they will cancel their plans due to recent fuel price increases and 8% said they will delay their plans until prices decrease. Additionally, 9% said they will drive a shorter distance than originally planned and 7% said they will consider flying instead of driving.

Only 2% of survey respondents say they will cancel their road trip vacation plans due to recent fuel price increases.

What about an increase of $1.50 per gallon?

Despite their intention to travel, consumers are not only faced with current high fuel prices, but also the expectation that prices will continue to rise. “Due to a variety of factors, fuel prices are expected to continue rising over the summer, which is terrifying for many drivers who are looking forward to getting out and seeing the world again,” says Kim. Still, when asked how a fuel price increase of $1.50 or more per gallon than now would affect their willingness to take road trips/driving vacations, only 16% of respondents said they would not be willing to take road trips. “Consumers have a threshold, and many are already stretched to the limit with current gas prices, but the desire to travel outweighs the financial concerns for many,” says Kim.

16% of respondents say they would not be willing to take a road trip if fuel prices increase by $1.50 per gallon or more.

Consumers Look to Technology, not Downsizing, to Cure Fuel Price Woes, Attain Energy Independence

AutoPacific’s latest round of Fuel Price Impact Survey (FPIS) data comes amid alarmingly high fuel prices and continued conflict in Ukraine. The survey, issued bi-monthly to AutoPacific’s proprietary panel of respondents, received responses from over 650 vehicle owners in the United States.

The data reveal that over half of consumers (52%) remain unwilling to change the type of vehicle they drive even with higher fuel prices. The 25% who say higher fuel prices would cause them to change the type of vehicle they drive say the price of fuel must be about $1.00 per gallon more than what they’re paying now, or a median price of $5.32 per gallon compared to the current median of $4.23 per gallon. “Historically, and during the long stretch of fairly consistent fuel prices, respondents have said it would take approximately $1.50 more per gallon to cause them to change their vehicle type,” says AutoPacific president and chief analyst Ed Kim. “Despite substantially higher fuel prices recently, the data tell us that consumers are generally unwilling to change the type and size of vehicle they drive.”

Over half of consumers (52%) remain unwilling to change the type of vehicle they drive even with higher fuel prices.

SUV Owners Would Choose Alternative Powertrains Over Downsizing

For those who currently own an SUV or crossover, nearly half (47%) say they would consider a hybrid or plug-in hybrid SUV while 30% would consider an all-electric SUV if fuel prices are as high or higher than now when they’re shopping for their next vehicle. Under those circumstances, only 18% of SUV or crossover owners would consider downsizing to a smaller SUV or crossover, while a scant 7% would consider getting out of their SUV or crossover and into a sedan or other type of passenger car. “Consumers are turning to technology rather than downsizing to solve the problem of rising fuel prices,” says Kim. Even as fuel prices are the highest seen in over a decade, SUV purchase intention continues to rise, with over half of respondents saying they would choose an SUV for their next vehicle and another 13% intending to choose a pickup.

Only 18% of current SUV or crossover owners would consider downsizing to a smaller SUV or crossover, while a scant 7% would consider getting out of their SUV or crossover and into a sedan or other type of passenger car.

The Conflict in Ukraine Plays a Role in Alternative Powertrain Interest

59% of respondents expect fuel prices to increase in the future, representing the majority of respondents. Of those who expect fuel prices to continue rising, 81% expect that to happen as a direct result of the conflict in Ukraine. “Consumers have far more options now than during previous fuel price spikes with the influx of hybrid, PHEV, and electric vehicles now available for sale and coming in the near future, and it seems that fuel price increases and cries for energy independence have given electrified powertrains a boost in consumer demand,” says Kim.

25% of survey respondents say factors directly related to the conflict in Ukraine make them more likely to consider an EV for their next vehicle. While “charging is cheaper than fueling” remains the top reason why EV intenders would choose an EV (85%), 63% of EV intenders would choose an EV because EVs contribute to energy independence for the U.S. and 52% of EV intenders say the conflicts around the world make them want to reduce their consumption of oil.

Consumers have more options now than during previous fuel price spikes with the influx of hybrid, PHEV, and electric vehicles. Fuel price increases and cries for energy independence have given electrified powertrains a boost in consumer demand

EV Intention is on the Rise, but What’s Driving It?

9% of current vehicle owners intend to buy an ev

According to data from AutoPacific’s latest Fuel Price Impact Survey (FPIS), 9% of current vehicle owners intend to purchase an EV for their next vehicle, up from 4% just two years ago. The trend survey, issued bi-monthly to AutoPacific’s proprietary VehicleVoice member panel, captures responses from approximately 600 current vehicle owners each survey period.

After hovering around 4-5% for years, the jump in EV intention can likely be attributed to several factors, including more nameplates in the market, financial and driving incentives, environmental concerns, and desire for technology. When asked why they would choose an EV, 85% of respondents agreed with the statement an EV “is better for the environment,” while 80% agreed that EVs are “the way of the future.” “It’s exciting to see consumers embrace the future potential for EVs and their place in the world of transportation,” says Deborah Grieb, AutoPacific market research manager. “With over 120 EV nameplates expected to be on sale in the U.S. in the next 5 years, growing consumer interest is essential.” Can consumer demand grow enough to support 120 EVs?  

Source: AutoPacific Fuel Price Impact Survey April 2021

Fuel Prices Have Little to No Impact on EV Intention

AutoPacific data debunks one past theory surrounding interest - fuel prices. “When fuel prices were at their highest, EVs were relatively unknown in the market and not a solution for escaping those high prices,” says Grieb. Now that fuel prices have been stable for several years and manufacturers have made significant improvements in fuel economy, consumer choice of an EV can be based on reasons other than desire to save money on gasoline.  According to FPIS data, increases in EV intention are seemingly unrelated to fuel prices, even with recent fuel price increases and future price expectations. 

Source: AutoPacific Fuel Price Impact Survey Sept 2010-April 2021