Gas Prices Are Up…But Small-Car And Hybrid Interest Down?

By Bengt Halvorson

Bengt Halvorson

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11 2,083 views February 11, 2010

Smart ForTwo Edition Highstyle

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A continued rise in fuel prices means that people migrate to smaller vehicles and those that get higher fuel economy. Right?

Well that's what common sense might lead us to think, but the Fuel Price Impact Survey from the Tustin, California-based market-research firm AutoPacific shows otherwise.

The firm reports that interest in small cars and hybrids is, surprisingly, fading as pump prices continue to rise. When motorists were asked what they would replace their current vehicle with, just 12 percent in the latest January 2010 survey said that they'd consider a small car (like the 2010 Honda Fit, the very diminutive 2010 Smart Fortwo, or the highly anticipated 2011 Ford Fiesta); that's down significantly from 16 percent in June 2009 and 24 percent in January 2009.

For hybrids, such as the 2010 Toyota Prius, just 11 percent said that they would consider one if they were to replace their current vehicle today, while 14 percent said they'd consider a hybrid last June and 25 percent a year ago.

2010 Chevrolet Suburban

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The trends for SUVs and pickups are quite the opposite, with SUV intention steadily rising—from 16 percent in January 2009 to 26 percent this January with pickups up from 10 percent a year ago to 15 percent this past month.

The perplexing part, at first glance, is that over that entire time the price of fuel has risen about 80 cents a gallon, to $2.69 on a national level, with the most significant increase over the first half of 2009.

What's different about the past year is that although prices have been a bit higher than in the past, there hasn't been the dramatic volatility that spanned from mid 2005 through early 2009. Just in 2007 and 2008, prices swayed wildly, with price trends looking like a seismograph printout. Looking at weekly totals from the U.S. Energy Information Administration, for instance in January 2007 the national average pump price was $2.22. That climbed to $4.13 by June 2008, and in December 2008 it had fallen to $1.71.

Since then it's risen, rather steadily, to $2.76, and there haven't been the steep peaks and troughs that we'd experienced for years leading up to then.

Dan Hall, AutoPacific's vice president, says that we've already seen a trigger point of about $4.00 for people to go into panic mode no matter what, considering vehicles they otherwise wouldn't have, but he says that if prices continue a gradual rise to that mark in, say, another year, we might not see such a pronounced boost for high-mileage vehicles. "What we saw before was in part fueled by volatility," Hall said to The Car Connection.

Car shoppers "are not having the knee-jerk reactions that they were having before," said Hall. Likewise, small-car and hybrid automakers "can't depend on volatility to always be there," he argued, adding that time and time again their studies have found that many buyers view small cars as a sort of compromise.

If not limited by fuel prices, "they go back to the vehicle that really fits their needs," Hall said.

Tell us what you think. Do gas prices really dictate what size vehicle you buy, or whether it's a hybrid or not? Or will you just get the vehicle you need and make other changes?

[AutoPacific]