Gas Prices Don’t Affect Car Sales Contends New Report

ALEXANDRIA, Va. — Fuel prices do not appear to significantly influence the types of vehicles consumers choose to purchase, according to a new report released by the Fuel Institute, a non-profit research-oriented think tank founded by NACS, the Association for Convenience and Fuel Retailing, in 2013.

The study suggests that despite cycles of high gasoline prices, an analysis of auto sales during those periods does not provide clear evidence that consumers shifted to purchasing more fuel-efficient vehicles solely due to fuel prices. Conversely, lower gas prices didn’t directly influence consumers to purchase vehicles that are less fuel-efficient.

Such findings runs counter to most popular media analysis.

The Fuels Institute’s report evaluated market data and analyzed the relationship between vehicle sales and retail fuel prices. 

“We know that consumers are extremely price sensitive and shop for gasoline based on price, and that the price per gallon affects their overall feelings about the economy,” said John Eichberger, executive director of the Fuels Institute. “This report set out to examine whether consumer behavior is influenced by prices at the pump when it comes to how consumers shop for a vehicle. In short, the report finds that factors other than fuel may have more of an influence on a consumer’s decision to purchase a specific type of vehicle.”

To analyze whether fuel prices are influencing the types of vehicles consumers are purchasing, the report examines sales trends for vehicle segments including small cars, electric vehicles, hybrids, large cars, crossover utility vehicles and sport utility vehicles.

The analysis found that sales of crossover and sport utility vehicles (SUVs) do not seem to be significantly influenced by retail fuel prices, indicating that consumers consider other more influential factors during the sales process. For example, data shows that sales for SUVs have increased 51 percent from 2010 to 2014 and have been relatively stable despite fuel price volatility. Conversely, sales of alternative fuel options, like battery electric vehicles, hybrids and plug-in hybrids, which typically deliver more miles per gallon than similar gasoline vehicles, do not seem to experience a significant increase in sales when fuel prices rise.

“Consumers continue to pay attention to gas prices, but our research does not support claims that they are basing a vehicle purchasing decision solely on the price at the pump,” says Eichberger. “Furthermore, the data calls into question media assertions that consumers are moving away from alternative fuel vehicles to less fuel-efficient models in response to lower gasoline prices. There are factors at play that cannot easily be explained by examining gas prices.”

 The full report (PDF) is available here.