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Consumers Rejecting Vehicles with Poor Gas Mileage

J.D. Power Study Finds Increased Sensitivity to Fuel Economy Despite Falling Gas Prices

September 26, 2006

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Despite the recent dip in gas prices, several months of higher prices have taken a toll on consumers as new-vehicle shoppers are more frequently citing gas mileage as a reason for rejecting a vehicle, according to J.D. Power and Associates.

The study, which examines why consumers consider a model, but ultimately purchase a different make or model, finds that nearly 17 percent of new-vehicle shoppers cite gas mileage as a reason for vehicle rejection -- up from 13 percent in 2002.

Poor gas mileage is the third-most cited reason for rejecting a vehicle, following "total price too high" and "total monthly payment too high," respectively.

"Although gas prices have begun to recede, new-vehicle buyers are likely to continue to be wary of volatile gas prices," said Jeff Zupancic, director of retail research at J.D. Power and Associates. "Considering that fuel prices did not increase significantly overnight, consumer demand for more fuel efficient vehicles has also been gradual. This is especially evident across certain vehicle segments."

In particular, heavier models with poor fuel economy, such as utility vehicles and pickup trucks, have the highest rejection levels due to gas mileage. Utility vehicle shoppers who reject a vehicle due to gas mileage will typically purchase a smaller utility vehicle that is similar in configuration to the larger vehicle they rejected.

For example, nearly one-half of all shoppers who consider a vehicle in the compact utility segment (EPA average fuel economy of 18 MPG) end up purchasing a vehicle from the compact CUV (crossover utility vehicle) segment (24 MPG average fuel economy).

"In the long term, vehicle models that offer a choice of engines, such as fuel efficient four-cylinders for those more sensitive to fuel prices, as well as more powerful six-cylinder engines for those seeking power, will have a distinct advantage in the market place," said Zupancic.

"Manufacturers have responded to these consumer needs by introducing CUVs as replacements for, or alternatives to, their truck-based utilities. These CUVs combine the high-seating position and passenger/cargo carrying capacity of utility vehicles with a car-like ride and better fuel-economy," he added

Price continues to be the most cited reason for vehicle rejection, with 36 percent of shoppers rejecting because the "price is too high." Despite the common perception that premium shoppers are less concerned with the cost of their vehicle, both premium and non-premium brands are rejected due to price at a similar rate --59 percent and 58 percent, respectively.

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