there is a remarkable disconnect in terms of how much consumers really know about such vehicles.
Oradell, NJ (PRWEB) April 1, 2008
With oil pushing $110 a barrel and a gallon of gas retailing at about $3.30, Americans are now spending more than 5% of their annual incomes (or about $135 per month) on filling up their tanks. That's up from 3% in 2004 and 4% in 2005.
For years the case for more fuel efficient vehicles was held back by the supposed cost to manufacturers while the case for alternative fueled vehicles held little appeal to a market happy with gasoline.
But that has now changed in a big way. In fact, according to a new study published this week by TechnoMetrica Market Intelligence, three quarters (74%) of American consumers are ready for alternative fuel vehicles.
Hybrids are the primary beneficiaries of consumers' rising interest in alternative fueled vehicles - with 55% saying that they would consider this engine type the next time they are in the market for a new vehicle - although flex fueled vehicles are not too far behind, with 47% of the vote.
Diesels are also in the running, although they lag with just 18% of the vote.
"We've surveyed Americans for five consecutive quarters and the results have been astonishingly consistent," says Raghavan Mayur, president of TechnoMetrica Market Intelligence and lead analyst at AutoView, the firm's automotive research division. "American consumers are no longer afraid of alternative fueled vehicles. Rather, there is a clamor for them now like there has never been before."
No wonder, since 70% of all US households - and 60% of affluent households earning more than $100,000 per year - say that high gasoline prices are really hurting them financially. And although four out of five Americans say that the government should provide more incentives to promote alternative fuel vehicles, much of the onus for their widespread availability falls squarely on automakers.
Some automakers, like Toyota, have been quick to capitalize on this fact and have captured substantial mind share among the public as being leaders in alternative fuel technology.
According to the study, nearly one half (45%) of consumers first think of Toyota when asked what manufacturer they associate with hybrid vehicles; Honda holds a distant second place with 17% of consumers associating this brand with hybrids, while Ford captures just 5% of the votes.
However, things are a bit different when it comes to diesel vehicles. According to the study, when consumers were asked which manufacturer first comes to mind when they think of diesel vehicles, Ford topped the list with 21% of the votes, followed by Mercedes-Benz (16%), Volkswagen (11%), Dodge (10%) and Chevrolet (7%). All other brands registered lower ratings.
Luckily for Toyota and other hybrid makers, the average consumer is more tolerant of higher price premiums for hybrids than they are for diesels.
Despite Heavy Interest in Alternative Fueled Vehicles Manufacturers Must Step Up Outreach Efforts
"Although the economic challenges being faced by ordinary consumers are driving an expansion of the alternative fueled vehicle market," says Mayur, "there is a remarkable disconnect in terms of how much consumers really know about such vehicles."
For example, the study showed that just 22% of consumers said that they are "knowledgeable" about diesel vehicles and even fewer - 19% - are knowledgeable about hybrids.
If that was not low enough, the study also found that while 28% are familiar with full hybrid vehicles, just 15% can accurately describe what they are, while the numbers for other types of alternative fueled vehicles are also low:
23% are familiar with plug-in hybrids and 21% know what they are, 13% are familiar with mild hybrids while just 6% know what they are and 23% are familiar with flex fuel vehicles while 22% are able to accurately describe what they are.
According to Mayur, these numbers show that as the industry introduces more gas-alternative vehicles into the market, it has to be aware of the fact that confusion could ensue among consumers, as the number of options increase and the details become blurred to market new comers.
"Since we began conducting these surveys, we've noted that fewer Americans are labeling themselves as being "knowledgeable" about both diesels and hybrids," says Mayur. "This is likely due to the growth the market is experiencing and the natural confusion that abounds when consumer choice increases."
In light of these findings, TechnoMetrica recommends that the auto industry develop a broad information dissemination strategy that makes full use of their dealership networks but also taps into appropriate media outlets as well as partnerships with academia.
Hybrids Still Ahead but Rival Technologies Likely to Chip Away at Market Lead
Hybrids have been at the forefront of modern hybrid technology for years now, with Toyota, Honda and other Asian manufacturers the primary drivers behind this segment of the market.
Since TechnoMetrica began tracking the alternative fuel vehicle market, hybrids have consistently trounced the other major gasoline-alternative technology with any real presence in the US market - diesels. In the latest wave of the study, when hybrid vehicles were pitted against diesel vehicles, consumers said that they found hybrids to be more appealing by a factor of nearly 5 to 1 (76% hybrids vs. 16% diesels).
However, the potential chink in the hybrid armor becomes evident when other alternative fuel technologies are added to the list. For example, when adding flex fuel vehicles, battery electric vehicles and fuel cell vehicles to the mix, hybrid appeal fell from 76% to 34% - still in the lead but representing a precipitous drop.
Meanwhile, upstart technologies like fuel cell and battery electric vehicles received 7% and 15% of the vote, respectively, while flex fuel vehicles - already popular in places like Brazil - received 12% of the vote. Diesels fell from 16% to 9%.
"What we've been seeing is a market that has been more or less dominated by hybrid vehicles," says Mayur. "What the present research shows is that although hybrids were among the first serious alternative fuel vehicles to enter US the market, other emerging technologies - or in the case of flex fuel, established technologies - are also quite appealing to consumers."
For manufacturers that had been fretting over how far behind Toyota and other hybrid makers have fallen, this should come as good news, as it shows that the way forward may have been started by hybrids but may soon be led by other, even more "radical" technologies. "In a very real sense," says Mayur, "hybrids represent a transitional technology to true oil independence."
Hurdles Still Exist
Although most Americans will be looking at alternative fueled vehicles the next time they are in the market to purchase or lease a new automobile, gasoline still holds a special place in their hearts. In fact, upwards of 90% say that they will consider a gasoline engine the next time they set foot in an auto dealership.
Besides the comfort of familiarity, many consumers still have concerns about alternative fueled vehicles. For diesels, the issues mainly revolve around their renowned reputation for being dirty, noisy and smelly. However, the number of consumers who continue to believe this about diesels is drastically down - from 2 out of 5 in the previous wave of TechnoMetrica's study (conducted in the fourth quarter of 2007) to 31% in the latest study.
Those who feel they lack enough knowledge to purchase a diesel is also falling, as is the number of those who say that there aren't enough models to choose from (down from double digit percentages to single digits in the latest study).
For hybrid, the main issue is one of knowledge - more than a third (37%) say that their primary concern in regards to hybrids is that they simply don't know enough about them. This is up from 30% in the last wave of the study. TechnoMetrica attributes this jump to the fact that there are now competing alternatives vying for consumer attention. Cost is also a major factor (cited by 17%) as is vehicle selection (although this concern is becoming less prevalent).
Ethanol or flex fuel technology is another alternative fuel technology that is mature enough for the mass market. However, unlike in Brazil, ethanol/FFV technology has a limited history in the United States and thus lack of knowledge is a very strong concern among consumers (cited by 53% in the latest study).
And while some consumers are worried that ethanol would be hard to find (14%), a growing concern is the impact that ethanol usage will have on food prices (8%, up from 4% in the previous wave) - and by extension food availability.
"This study shows that alternative fuels represent an intricately woven tapestry of wants and desires, fears and concerns that together form a dynamic and difficult to pin down market," says Mayur, "but it's still a market worth pursuing, not just for dollars and cents, but also because it represents the future of the industry."
About the Report
Based on a random nationally representative sample of 1,450 adults, the Alternative Fuels Tracker Study provides readers with insightful information on emerging trends and gauges consumers' level of interest in various alternative fuel technologies (hybrids, diesels, flex fuel, ethanol), how appealing they are relative to each other, consumers' level of knowledge, consumers' perceptions regarding alternative vehicle technologies, future purchase plans, the most effective approaches for successfully marketing these technologies, top informational sources and benefit packages. The study also contains a wealth of demographic and psychographic data, as well as consumer census data regarding the US automotive market (i.e., vehicle ownership, types, numbers, brands, etc.).
For questions, comments or for more information please contact TechnoMetrica at 800-328-8324.