Gas Prices Rise; Hybrids Win Big, Says Edmunds Study
By Michelle Krebs January 29, 2008
If you’re one of those cynical types who think people are buying hybrid-electric vehicles mainly to demonstrate their environmental hipness, results of a new fuel-price study by Edmunds.com indicate hybrid buyers may not be nearly so superficial:
They’re buying hybrids to save gas.
Edmunds analyzes the number of visits for every vehicle in the market to that model’s Vehicle Details page at Edmunds.com. It correlated those visits to extrapolate what would happen if the price of gasoline rose from its $3.01 price in December to a theoretical $4 per gallon.
Bottom line: Online vehicle shoppers flock to hybrids. And flee traditional midsize SUVs.
The study, which correlates the relationship –- “elasticity†–- between gas prices and consideration of specific vehicle models and types, showed about $2.80 per gallon currently is a “psychological turning point for consumers,†said David Tompkins, executive director of business solutions at Edmunds.
At less than $2.80, the elasticity is stable, he said; when the price of gasoline is more $2.80 per gallon, purchase consideration is much more elastic in many market segments –- particularly hybrids and compact cars on the plus side, and midsize and large SUVs on the downside.
Overall that means hybrids see a gigantic 502 percent increase in customer consideration if gasoline goes to $4 per gallon. Back-to-earth results drop to a still-large 36 percent for small cars.
The big losers in the $4-per-gallon scenario are “traditional†midsize SUVs (not today’s newer crossovers) at minus-35 percent, trailed closely by large SUVs at minus-34 percent.
| Edmunds Gas Price Analysis | ||
|---|---|---|
| Segment* | Elasticity | % Change in consideration due to gas-price increase from $3.01 (Dec) to $4 |
| Hybrids | 6.31 | +502% |
| Small cars | 1.08 | +36% |
| Midsize cars | 0.31 | +9% |
| Crossover midsize SUVs | 0.10 | +3% |
| Small SUVs | 0.01 | +0% |
| Small trucks | -0.29 | -8% |
| Sporty cars | -0.42 | -11% |
| Luxury SUVs | -0.55 | -15% |
| Luxury cars | -0.56 | -15% |
| Vans, minivans | -0.72 | -18% |
| Large trucks | -1.05 | -26% |
| Large SUVs | -1.45 | -34% |
| Traditional midsize SUVs | -1.49 | -35% |
*Approximate segment information
Source: Edmunds.com
Best, Worst Performers
More intrigue can be had by examining the performance of individual models:
• The biggest winner is the Saturn Aura Green Line hybrid, with an astounding
increase of 1,343 percent, followed by the Smart Fortwo, with an increase of 881 percent. Many hybrids scored a consideration increase of more than 400 percent. The class stalwart, the Toyota Prius, scored a comparatively meager 259 percent jump.
⢠Biggest loser at $4 per gallon: the Lexus LS 600h L â- the pricey hybrid variant of the Lexus flagship. Could be purchase intenders have calculated the LS 600h Lâs combined 21 mpg versus the conventional LS 460 Lâs 19 mpg doesnât justify the hybridâs exorbitant price premium.
As a group, however, traditional midsize SUVs, large SUVs and large trucks by far fared the worst –- not a single model in these groups scored a positive change.
• Several small pickups saw increased consideration. Tompkins said this is the result of customer interest in compact pickups as an alternative to thirstier full-size models.
• The luxury car and luxury SUVs segments, although containing some of the least-efficient models on the market, sustained only modest decreases of 15 percent. Explanation: Buyers considering these models typically have enough money that a rise in the price of gasoline of just $1 more than current levels isn’t enough to dissuade them from purchasing a luxury model.
Tompkins also said it is interesting to note a certain effect that perception plays in the game. He said the Toyota Tundra has the lowest elasticity among large trucks (-7 percent), even though the Chevrolet Silverado 1500 (-37 percent) and GMC Sierra 1500 (-16 percent) have better fuel economy.
There is a similar result for some “badge-engineered†models that use the same powertrain. Saturns, for example, appear to be perceived as more fuel-efficient than their Chevrolet counterparts; the Aura hybrid’s 1,343 percent hike compares with a 596 percent increase in consideration for the Chevrolet Malibu hybrid –- despite the fact the two essentially are the same vehicle.
LEAVE A COMMENT
Michelle, have any of the analysts done similar research for flex fuel (E85) and/or diesel powered vehicles. It would be interesting to see if the interest in these alternative fuels would dramatically increase with substantial increases in gasoline prices.
Interesting that the Chrysler LLC economist Paul Traub thinks it would take a rise to $13 (!) per gallon to make us really get serious about small cars. This might explain a disconnect between the what the domestics offer, what my family and friends talk about buying next, and the rise of the imports.
At my house we are very sensitive to the price of gasoline although it represents only a small part of the operating costs of our vehicles. We use it as a preview of possible rises in prices of other goods in a few months. Since our incomes don't fluctuate with the rise in fuel, plastic is so widespread in consumer goods, and b/c everything is delivered by truck we use the rise or fall of fuel prices as an indicator of future spending power.
We have chosen to drive 4 cylinder cars (VW Cabrio and Honda CR-V for years) for almost 20 years. Though I am a motorhead through and through - for daily use I don't need much of a car to get back and forth to work. Any luxury, large or large engine cars would be welcome at my house but reserved for occasional weekend or vacation use only. Any other time would be pointless and in light of the rising cost of operating a vehicle - wasteful. That said I generally encourage other people to do as they wish but - - - increasingly America's infatuation with thirsty vehicles means higher prices for ALL of us and I am tiring of paying high prices for the next guy to drive big vehicles.
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