ALEXANDRIA, Va. -- Americans are flocking to pickup trucks and big SUVs because gasoline prices are so low: It’s a common headline nowadays but not actually accurate. That’s one of the conclusions from the Fuels Institute’s latest study, Driving Vehicle Sales—Utility, Affordability and Efficiency. The July 2018 study examines which market trends have influenced vehicle sales, crunching vehicle sales figures from 2003 to 2017 as well as the interplay of retail gasoline prices and vehicle fuel efficiency and price in decision-making.
CSP Fuels spoke with John Eichberger, executive director of the Fuels Institute, Alexandria, Va., about some of the more common assumptions that the study debunked. They include …
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Despite news reports about Americans in love with pickup trucks and SUVs, the truth is that both classes have lost share of light-duty vehicle sales when examined from 2003 to 2017. Only in the past few years has momentum shifted.
“Even though we’ve had a significant increase in sales, we’re still not at prerecession peaks,” Eichberger said. “I’d already assumed that the whole truck addiction was a myth. And that just kind of reinforced it for me.”
One vehicle class has overwhelmingly gained share during the 2003 to 2017 time period: cross utility vehicles (CUV), also known as crossovers. This class grew its share from 10% to 35% of vehicles sold. CUVs include vehicles such as the Honda CRV and Toyota Rav4. CUVs provide the fuel efficiency and the ride quality of a car, at a lower price than a full-size SUV, which has driven their popularity over the past couple of decades.
Why then the headlines on pickup trucks and SUVs?
“It’s two things: They don’t understand the distinction between a crossover and a sports utility vehicle,” says Eichberger, noting that a CUV typically has a car chassis—the CRV uses the Civic chassis, whereas an SUV uses a truck chassis. “They see a Rav4 or CRV or Escape and think, ‘that’s an SUV.’ ” He also suspects an echo-chamber effect may be in play, where some in the media repeat the popular opinion.
While the logic here seems reasonable, a closer examination of sales trends during periods of increasing and declining fuel prices muddies the water a bit.
For example, from 2009 to 2012, when gas prices were on an upward trend, sales of small vehicles were static. SUVs and vans, meanwhile, grew market share, according to the Fuels Institute analysis. From 2012 to 2016, a period of declining fuel prices, SUVs continued to gain market share, as did pickup trucks. Small vehicles lost more than three points in market share.
“It is tempting to draw conclusions from such data, but it is impossible to determine from the performance of the market that fuel prices drove sales of certain classes of vehicles,” the report states. Rather, one should consider how fuel economy has improved in each vehicle class and the purchase cost in determining why market share has changed.
While fuel efficiency is a top motivator of vehicle purchase decisions—superseded by price—it is not likely to encourage consumers to switch to an entirely different vehicle class, such as from a CUV to a compact car.
“They may opt for a more efficient crossover, but they are going to shop within their class of vehicle that they need and want,” said Eichberger, pointing to past Fuels Institute consumer surveys. “They’re not going to change class of vehicle because of fuel efficiency.”
To read the latest Fuels Institute study, Driving Vehicle Sales—Utility, Affordability and Efficiency, click here.
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