Consumers and Auto Sales
Automakers invest heavily in new models of cars and light trucks, so they are eager to sell those vehicles in large volumes – especially when government evaluates automakers on those sales.
The federal government develops mileage standards called “Corporate Average Fuel Economy,” or CAFE. Once the government set targets, automakers are not evaluated based on whether the products they offer consumers meet the government targets; rather, automakers are evaluated based on the products consumers choose to buy. So, low consumer interest in high-mileage vehicles presents a serious challenge to the government’s ambitious fuel economy and greenhouse gas targets.
While average fuel economy of all new vehicles continues to rise, sales of the most energy-efficient autos remain low. For example, in model year 2018, the auto industry produced more than 100 electrified models. Their combined sales is about 4 percent of total U.S. sales. Sales of the most energy-efficient models will need to grow substantially to meet projected government targets.
Customers have multiple goals when car shopping.
Fuel economy is a leading consideration to 32% of buyers, according to Strategic Vision, a consumer research company. Mileage makes the shopping list, though often not at the top. Fuel economy/mileage ranks 20th as a purchase rationale, according to Strategic Vision’s massive survey of new car buyers conducted after their purchases to gain deeper insight into what motivated their choices.
The gas engine still dominates consumer preferences.
Many factors drive consumer buying decisions, including vehicle costs, the price of gas and business and family needs. Consumers overwhelmingly choose gas-powered engines over alternative powertrains. One reason is gas-powered engines have become more fuel-efficient.
Sales of alternative powertrains remain modest.
Over 100 models of hybrid-electric vehicles, plug-in electric vehicles, fully electric vehicles and fuel cells are on sale now, yet the combined sales of these vehicles in 2018 was 670,022, which was less than the sales of the single best selling pickup truck alone (844,448).
Sales of hybrids, plug-in hybrids and fully electric vehicles are increasing but still represent a small percentage of total sales.
Gas prices affect passenger vehicle sales.
When gas prices fall, consumer demand declines for high MPG vehicles and alternative powertrain vehicles, while increasing for light trucks like SUVs, vans and pickups. This is especially so when mileage gains are growing across all classes of new vehicles. A strengthening economy compounds this dynamic, driving up demand for light trucks to meet business needs for larger vehicle capacity.