Consumers Expect Fuel Prices to Increase, but Won't Change the Type of Vehicle They Plan to Purchase

Today’s rising fuel prices won’t change the type of vehicle most consumers plan to purchase. Automotive consulting firm AutoPacific has been studying the impact of fuel prices on consumer vehicle purchase behavior bi-monthly since 2005.

In our most recent January 2022 Fuel Price Impact Study, 65% of respondents said they expect fuel prices to increase in the near future, yet only 23% of respondents said higher fuel prices would cause them to change the type of vehicle they would purchase if purchasing today. This is up from 15% in August 2020, when fuel prices were lower than today, yet down from a high of 33% in 2012. “Technology has enabled the fuel economy of vehicles of all types to improve enough over the past decade that consumers are no longer forced from SUVs to passenger cars because of high fuel prices as they were in 2008, or even 2012,” says AutoPacific President and Chief Analyst Ed Kim.

Despite expectations of rising fuel prices, the majority of vehicle owners won't let it change the type of vehicle they plan to purchase in the future.

Owning an SUV or Truck is No Longer a Major Penalty When it Comes to the Fuel Pump

In March 2012, average fuel prices reported by panel members in the U.S. were the highest seen in the last decade, averaging $3.87 per gallon. At that time, 33% of respondents said they would change the type of vehicle they would purchase due to higher fuel prices. Also at that time, the mix of new car and light truck purchases was about 50/50 and light truck fuel economy was lower than today, forcing many vehicle owners into smaller or more fuel-efficient vehicles such as mid-size or compact sedans.

Jump 10 years to 2022 and the mix of new car and light truck purchases is heavily weighted to light trucks, accounting for approximately 77% of the market. Despite the much higher light truck mix, vehicle owners reported getting an average of 24 mpg whether in 2012, when light trucks represented just 50% of the market, or today. This gives consumers little incentive to abandon light trucks such as SUVs and pickups for passenger cars. “Thanks to impressive improvements in efficiency, today’s consumers enjoy a similar level of fuel economy as they did ten years ago even though they are much more likely to be driving light truck products today,” says Kim. “This is a major factor behind why SUVs are here to stay; they simply don’t require a big sacrifice at the pump in the way that they used to.”

Although fuel prices have comparatively little impact on vehicle type chosen, fuel economy is still important. 49% of respondents in January 2022 agreed with the statement, “the better the fuel economy, the more likely I am to buy a specific vehicle.”

Consumers Can Still be Swayed by Fuel Economy When Shopping for a Vehicle

Although fuel prices have comparatively little impact on vehicle type chosen, fuel economy is still important. 49% of respondents in January 2022 agreed with the statement, “the better the fuel economy, the more likely I am to buy a specific vehicle.” While fuel economy may drive consumers in a specific vehicle type or powertrain direction, once the considerations have been narrowed, consumers are unlikely to be swayed from one vehicle to another by fuel economy. 58% of respondents say it takes an improvement of 5 or more miles per gallon to prefer one comparable vehicle over another.

Light Vehicle Sales Predicted to Increase to 16.2 Million Units in 2022

Automotive consulting firm AutoPacific’s recently released forecast of U.S. light vehicle sales predicts 2022 will reach a total of 16.2 million vehicles sold. This is up from the 15.1 million units actually sold in 2021 during the second year of the ongoing COVID-19 pandemic that continues to cause havoc on the global supply chain and results in drastically short supplies of new vehicles available to consumers

Moving forward into a new year, AutoPacific expects over a 1 million unit increase over 2021, as chip supply gradually returns and new vehicle inventory starts to fill up again, especially during the second half of 2022. “Consumers have money to spend on new vehicles,” says Ed Kim, AutoPacific President and Chief Analyst, “but with such low supply last year and the start of this year, there is pent-up demand.”

2023 will see a return to 17+ million unit volumes, followed by a mild cooling off period over the next couple of years as pent-up demand gets filled, though volumes are expected to stay above 17 million units.

Times are Changing as Consumer Demand for Certain Vehicle Features Shifts

Four New Features Ascend into the 2021 Top 10

AutoPacific’s latest Future Attribute Demand Study (FADS) has indicated a sharp growing interest in certain vehicle features while others have fallen on the wayside. This year, 88,998 new vehicle acquires were surveyed via AutoPacific’s 2021 New Vehicle Satisfaction Survey (NVSS) to determine what features today are hot, and which ones are not.

2020 was a turbulent year for many consumers, a time shaken by the onset of a global pandemic and its still-lingering side effects. The auto industry itself wasn’t immune to the chaos. Health concerns rose while consumer confidence plummeted as lockdowns began. Dealerships saw drastically fewer (if any) foot traffic and vehicle assembly plants went dark. But people were still buying and selling cars albeit at far less of a rate than in 2019 and through different mediums this time around like Carvana, Vroom, along with local dealerships and automakers trying various at-home services like contactless test drives.

Amidst this shift in consumer behavior, priorities, and preferences, we’ve seen four features in our 2021 FADS climb their way into the top ten list from out of the lower ranks including front and rear parking sensors, Apple CarPlay and Android Auto, ventilated/cooled front seats, and LED front exterior accent lighting.

In looking over the list of the top ten most demanded features, heated front seats remains the number one item on consumer wish lists with 66% wanting this on their next new vehicle followed by blind-spot information system (commonly referred to as blind spot monitoring) at number 2 with 60% demand.

Notably, of all ten driver assistance features or ADAS surveyed in the 2021 FADS, demand is the highest for blind-spot information systems, followed by lane departure warning at number five. Consumer demand for other key ADAS systems is noticeably lower like active lane keeping assist (45%), forward automatic emergency braking (41%), and rear cross-traffic alert (38%). This difference may be attributed to the lack of consumer awareness of the benefits of these systems. For example, systems like blind spot monitoring and lane departure warning are often activated much more frequently than systems like forward automatic emergency braking. “When consumers hear about a vehicle’s ability to stop itself automatically, they are often wary.  When they experience it saving them from committing a driving error, they clearly see the benefit,” says Dan Hall, Vice President of AutoPacific. As automakers continue to roll out many of these ADAS systems as standard-issue on their products or bundle them together in further options packages, and more consumers learn how crucial these pieces of life-saving tech are, AutoPacific predicts demand will rise.

LED front exterior accent lighting skyrocketed to the number eight most demanded feature for 2021

Two of the hottest features most in demand by new vehicle shoppers this year include Apple CarPlay/Android Auto and LED front exterior accent lighting. The latter jumped 26 spots to the number eight on our top ten list for 2021, likely a result of more and more mainstream vehicles bypassing traditional, simple headlamps and front fascias for more intricate, flashy LED accents adorning the headlights, grille, and even by way of illuminated front emblems like Mercedes-Benz’s glowing star. “Once the mark of luxury brands only, LED exterior lighting is enhancing the designs of vheiles in every segment and price point.  In addition to being a design enhancement, LEDs help visibility and have a long life,” says Hall.

Another feature we expect to continue to grow in demand like wildfire, is Apple CarPlay/Android Auto. This popular infotainment feature is found on nearly every new vehicle on sale today, oftentimes as standard-issue, and serves as a great way for drivers and passengers to link their smartphone to the vehicle’s infotainment system to project things like navigation, messages, and music or podcast streaming. Younger shoppers including millennials and tech-savvy Gen X individuals will only fuel the surge in demand as more and more consumers realize the future is in tethering a smartphone directly to the vehicle.

Survey respondents are individuals who purchased their new vehicle outright, financed it, or leased it and who have completed the survey section regarding their next vehicle. The FADS study closely analyzes the characteristics consumers prefer in their next vehicle and gauges demand for over 100 specific features.

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

Need for Social Distancing Causing Vehicle Servicing Delays

1/3 of Vehicle Owners Are Choosing to Delay Servicing Their Vehicle

According to a recent study by AutoPacific, 34% of vehicle owners are choosing to delay or completely forgo their vehicle service during the COVID-19 pandemic, while another 28% will only take their vehicle in for necessary maintenance.

Source: AutoPacific COVID-19 survey (n=1,119)

According to the survey of more than 1,100 vehicle owners, fielded April 9-20, 2020, the need for social distancing is the primary reason for choosing to delay or forgo servicing their vehicle. 68% of respondents said, “I need to social distance; I don’t want to spend time in a waiting room with other owners.” 41% don’t want to be exposed to dealer personnel, and 41% don’t want their vehicle exposed to germs by mechanics, technicians and drivers. Personal finances, such as job loss or reduced income, account for 11% of service delays.

The affects of COVID-19 are being felt in every part of the automotive industry, from manufacturing to sales to service. “The majority of Americans are simply not driving much right now - no road trips, no commuting miles - so people can likely delay their service without causing damage to the vehicle, making service non-essential for the time being” explains AutoPacific president George Peterson.

Remote Connectivity is Here to Stay and Younger Car Shoppers Want It

Do You Want to Remotely Activate Your Vehicle?

According to AutoPacific’s latest Feature Attribute Demand Study, 64% of new vehicle buyers under the age of 40 want remote connectivity in their next vehicle.

From Hyundai to Lamborghini, vehicle owners have the ability to easily perform basic functions like locking and unlocking, starting an engine, or activating heated seats on a cold winter morning. Some apps take it a step further in offering convenient remote dealership maintenance scheduling, paying a monthly new vehicle loan, and even establishing geofencing or curfew alerts for adolescent drivers.

Results show that the younger the new vehicle buyer, the stronger the demand for remote connectivity, with 65% of new vehicle buyers under age 30 showing a desire and 64% between 31 and 39 years old. As expected, the demand drops in steps as the age brackets for new vehicle buyers climb. Only 35% of buyers 60 to 69 years old, and a mere 28% over the age of 70 desire this level of connectivity with their new vehicle.

Source: AutoPacific Future Attribute Demand Study

Alexa, Start My Car at 7:00 AM

From the comfort of one’s living room or conference room to being on a hike at a national park’s trailhead, the methods by which consumers tap into remote connectivity continue to expand. 97% of surveyed new vehicle buyers that voiced demand for wanting remote connectivity to their vehicle would prefer to use a smartphone for doing so; 40% would opt to use a smartwatch. At-home “smart speakers,” specifically Amazon’s Echo (Alexa), get 30% preference. 

Source: AutoPacific Future Attribute Demand Study

Real-World Impact 

To gauge effectiveness of various manufactures’ mobile apps, AutoPacific polled a group of current vehicle owners that fall under the Generation Y and Generation Z umbrellas on how having access to remote connectivity contributes to everyday life:

“I use it (MySubaru app) daily in the winter and on hot days in the summer to star my car. The lock and unlock comes in handy when needed, but I don’t use it every day” -Adam, 37

“I turn on the climate control on colder mornings in my 2014 Nissan Leaf.”-Colton, 28

“I use it (FordPass app) to lock and unlock my Ford Escape when I can’t remember if I did it or not” -Emily, 37

“I only check the charging status if I'm on the road at a public charger. At home I never look at it (Tesla app) because it fills up overnight and is good to go.  I also use it in the morning to warm up the car.” -Chris, 38

These responses reflect much of what AutoPacific’s Feature Attribute Demand Study revealed about specific remote functionality. For example, 79% of respondents who want remote connectivity with their vehicle would utilize it for a remote start function. 75% would use remote connectivity to lock or unlock their vehicle’s doors, while 72% would choose to pull out their smartphone or glance at their smartwatch to locate their vehicle in say, an overcrowded parking lot. 

Remote Connectivity is Here to Stay

As more young buyers enter the marketplace for a new vehicle, AutoPacific expects remote connectivity is here to stay. Manufacturers should continue to pursue offering some type of remote connectivity, whether through mobile apps or “smart speaker” compatibility. 

Economic Uncertainty Delays Near-Term New Vehicle Purchases

39% of Near-Term Intenders Plan to Delay Their New Vehicle Purchase

39% of consumers who intended to purchase a new vehicle within the next year say their plans have been delayed due to COVID-19. According to results of an online study of U.S. vehicle owners, fielded by AutoPacific from April 9-April 20, 2020, the majority of delays range from 3-6 months (33%) and 7-12 months (25%), while 27% say they are just waiting for things to get back to normal.

Source: AutoPacific COVID-19 impact survey; 0-12 month purchase intenders

Source: AutoPacific COVID-19 impact survey; 0-12 month purchase intenders who plan to delay their purchase (n=52)

The economic threat appears larger to the car-buying population than the fear of contracting or transmitting the disease.

Over half of consumers state “economic uncertainty” as the top reason for this delay while 19% say “fear of going out” has caused the delay.

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