Gas Prices Precipitate Change According to Survey

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Consumers are changing their habits as the cost of a gallon of gas increases. This has opened the door to new opportunities for companies like General Electric, Dell and Google to get in on the auto scene.

It is obvious from this study that $4.00 is a tipping point. People are not merely making minor adjustments to their driving habits; they are considering radical changes we have not seen previously

Over the weekend the price of regular gasoline topped $4.00 per gallon for the very first time and consumers believe this is only the beginning. In a nation-wide survey just completed, drivers indicate that the recent increases in gasoline prices are already having a significant effect on their driving behavior, and will dramatically impact their car purchasing behavior. Of most interest is the fact that drivers will increasingly consider cars from non-traditional brands and manufacturers as the price of gas continues to climb.

A joint study by Auto Futures Group and TechnoMetrica reveals that car ownership behavior and car purchase preferences are already changing. Key findings include:

  •     92 % of drivers expect the price of gas will stay above $4.00 per gallon over the next three months. One third expect gas prices to top $5.00 per gallon this summer and nearly 40% expect prices to exceed $6.00 per gallon within three years.
  •     Over 80% are already bundling their errands when driving.
  •     66% are driving less and, a similar percentage, are now using the family's more fuel efficient vehicle as their primary car.
  •     87% are likely to make their next purchase a more fuel efficient car and 38% are considering trading in or selling their present vehicle for something smaller or more fuel efficient.
  •     When asked if, at $6.00 per gallon, they would consider buying cars from non-traditional car companies, the answers are quite interesting. If they delivered better fuel economy than cars from traditional manufacturers; 68% percent would consider a car from General Electric, 43% would consider a car from Dell, and 34% would consider a car from Google. Cars from India or China are considered by approximately 30% of drivers.

This is a break with past behavior according to Bert Holland a senior partner of Auto Futures Group. "In the past drivers have held back temporarily when gas became scarce or there were price spikes", explained Holland, "but this time there is a marked shift in both expectations and behaviors. People are driving less and fuel economy is becoming a major purchase influence".

The study confirms that people do not intend to give up their private cars. Instead, they plan to purchase or lease smaller or more fuel efficient cars. Hybrids are the preferred alternative to traditional gasoline powered cars. Diesels continue to be of relatively little interest to drivers in America.

Raghavan Mayur, president of TechnoMetrica, stated this particular study had been developed in recognition of the dramatically changing environment in the automotive market. "We have been doing our quarterly Alternate Fuels Tracker for some time, but now the price of gas has reached a level where it precipitates real changes in driving and purchasing behavior", Mayur explained. "It is obvious from this study that $4.00 is a tipping point. People are not merely making minor adjustments to their driving habits; they are considering radical changes we have not seen previously". And this has serious implications for sales volumes according to Mayur, "compared to our earlier waves of research, we now register a marked decrease in overall car purchase intent".

The survey explores people's present vehicle purchase intent, and how it might change if fuel rose to $6.00 and $8.00 per gallon. At today's gas prices, 37% of people intend to purchase a sub-compact or compact car, at $6.00 per gallon this rises to 58%, and at $8.00 per gallon it climbs to 65%. The intention to purchase a full-size or midsize car drops from 38% today to under 19% at $8.00 per gallon. The effect on the SUV market is even more profound. At $8.00 per gallon, the intent to purchase an SUV drops to just one third of today's level.

To determine people's willingness to make real change, the study asked would you consider purchasing cars from a non-traditional car manufacturer provided it offered better fuel economy. The questions presented the names of several well known brands including General Electric, Dell and Google. The results clearly show that the acceptance of these names as vehicle brands is quite good and increases as the price of gas increases. Similar questions were asked about cars produced in China and India. The results showed a parallel trend, consideration rising as gas prices increase.

"Auto Futures Group has been expecting changes like these in vehicle preferences with increases in fuel prices", Holland explained. "We also anticipated there would be a number of new manufacturers by 2015. But the readiness to accept vehicles from non-automotive brands like GE, Google, and Dell; and from different countries like China and India is growing more rapidly than we expected."

TechnoMetrica conducted the survey as a part of the sixth wave of their Quarterly Alternate Fuels Tracking Study. More than 900 interviews were completed yielding a statistical accuracy of 3 percentage points.

TechnoMetrica Market Intelligence Inc. is a progressive full-service research firm established in 1992. The firm is headquartered in Ramsey, New Jersey and provides both quantitative and qualitative research solutions to the business and government markets. TechnoMetrica has been providing innovative research solutions to many of the world's most respected automotive brands for over a decade.

Auto Futures Group LLC was founded to support the development of new business in the rapidly changing automotive market. The Group provides comprehensive and sophisticated analysis and business deliverables in the areas of strategy, marketing, product, consumer preferences, emerging technology, regulatory compliance, and distribution channels in the US automotive environment and worldwide. Headquartered in Ridgewood, New Jersey the Auto Futures Group is comprised of experienced senior managers all of whom have worked for some of the world's most respected automobile companies.

Note to Editors:
Users of these statistics should attribute credit and source to AFG/TechnoMetrica as this research is proprietary.

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