$4 Gas Shifts Interest to Compacts, Hybrids

Are consumer preferences leaning toward small cars and hybrids over trucks and SUVs now that gas is headed to $4 a gallon?

Yes, but car shoppers aren't shifting their behavior as significantly as they did when gas prices actually topped $4 a gallon in 2008.

When you look at Cars.com data, shoppers are focusing more on compact cars and hybrids as interest in SUVs and crossovers wanes. As a percentage of total new-car searches, SUVs searches have dropped from a 27.7% share of our search in December 2010 to 25.1% in February 2011. Conversely, compact car searches have increased from 9.7% to 11.7% during the same time frame. As a percentage of our new-car search traffic, hybrid and compact car searches in February were the highest we’ve seen since August 2009 (compacts) and November 2009 (hybrids).

What’s behind the shift? Looking back at Cars.com search traffic, we believe the shift directly correlates to rising gas prices. We also think that a national average of $4 a gallon for gasoline would again tip the majority of new-car purchases back to cars. Here’s why:

Back in 2008, Cars.com searches showed a dramatic shift in search preferences when gas prices rose past $4 a gallon. The data also suggested an inverse relationship between light trucks and more fuel-efficient cars and hybrids.

In July 2008 when gas prices peaked at a $4.09 retail average for a gallon of regular unleaded gasoline, pickups and SUVs collectively made up 27.4% of all Cars.com’s new-car searches. That's compared with 36.2% in February 2008. On the other hand, hybrids and compact cars moved from 15.4% of search to a 26.4% share.

The search data is reinforced by actual sales from the time. Cars finally outsold light trucks and SUVs in 2008; it was the first time cars had outsold trucks in eight years. As the average price of gas fell from from its extraordinary high, so grew consumers' appetite for light trucks. In October 2010, trucks outsold cars by the widest margins since 2005, according to J.D. Power and Associates.

The data also suggest that $4 a gallon gas may indeed be the tipping point to more fuel-efficient options; either truck/SUV buyers opt for something more fuel efficient or drop out of the new-car market altogether (as the above and below graphs illustrate). The tipping point seems to work the other way, too. As gas prices dipped below $4 a gallon in August 2008, there was an immediate drop in hybrid searches — from 5.6% of search to 3.6% of new-car searches. Hybrid searches continued to decline throughout that time, hitting a lull when gas prices increased and then stayed stable around $2.75 from November 2009 to November 2010. Hybrid search maintained levels at a quarter of those seen in July 2008. Hybrid sales have struggled overall, except for Toyota Prius, which still made up close to 60% of all hybrid sales last month.

Since mid-2010, light trucks have again outsold cars, but with sharp increases in the cost of gasoline that could change again. We just may be witnessing the start of another shift in car shopping like we did in 2008.

We'll have more on this shift, taking into account the much higher gas prices in March, later this week.

By Colin Bird | March 16, 2011 | Comments (19)

Comments 

jstant01

I can understand big vehicles for big families, but I am confounded as to why people continue to buy big SUVs, trucks, crossovers or even big cars for their individual daily commutes or if they don't have a big family. I always hear "safety", but how likely are most of us to truly encounter a semi or a Suburban in an accident? There are so many dynamics at play as to whether a person survives an accident that I just don't buy that "size" is enough of a reason to buy a gas-guzzling behemoth using the safety argument.

I have purchased compact cars for my daily commutes (which used to be much longer than they are now) and have been completely satisfied. I could care less about "status" - I think people who buy a Lexus instead of a Camry are equally nuts.

I like muscle-car power and looks, but would only ever buy one as an occasional weekend ride or something - I would never consider them as a daily driver.

Anonymous Coward

How quickly buyers have forgotten the high gas prices of 2008.

Tony

Americans are dumb when it comes to cars (and more). As soon as gas goes down they are shopping for SUV. Listen, IMHO, it is dumb to have a big family. Anyone having 3-4 or more kids, especially if they are not millionaires, are simply irresponsible. What kind future they prepare to these kids. A ghetto of West Philly? So, basically, people get cars they can't afford, houses they can't afford, kids they can't afford or provide good future....
Dumb people

Skankzilla

Seriously Tony...?

can't even begin to comment on Tony there...

I wonder if it's a matter of curiosity -- "I wonder if something this small would work..." -- than an actual immediate interest in downsizing. Sales figures will be interesting to see.

Max Reid

http://www.treehugger.com/files/2011/03/the-new-pepsi-challenge-beating-coke-petroleum-free-plastic-bottle.php

http://www.treehugger.com/files/2011/02/heinz-to-adopt-cocacola-plantbottle.php

Instead of cribbing about gas prices, see what the big companies are doing.
Pepsi and Coke are trying to reduce the plastic content in their soda bottles with plant based material.

On our part, we can also replace the plastic spoons, forks, knifes with the metal ones.

Also replace the plastic grocery bag with the tote bags. All these will reduce the petroleum consumption and also keep the environment clean.

Then we will think of hybrids.

Max Reid

Actually no use in blaming the American individuals when the Government keeps borrowing and pumping money to people.

http://www.treasurydirect.gov/NP/BPDLogin?application=np

Our national debt is more than 14.2 trillion and thats 96% of our GDP of 14.7 trillion.

This may not last for long. Better start buying fuel efficient vehicles now itself.

Tony

Max,

lets think about why our government is like this? Ah, it is actually made up of bunch of American individuals! And not even the smartest ones.

Tony

David T.,

I hoped to disturb some egos here. Apparently, they don't care.

Belly

Sorry to anyone who takes offense, but I agree with Tony to an extent.

DodgeFan

Besides the incrimental shift due to gas. People might be buying smaller cars because they are cheaper and unsure of the future. Although car companies are trying to make us pay more for basic transportation.

I have never got information like that. Thank You for the information

Noley

I've had small or medium-size cars for 40 years (VW's Volvos, Saabs). Not many shortcomings. Unless one has a daily need to haul a lot of people or stuff, bigger cars are all ego and totally unnecessary.

Europe seems to manage quite nicely without giant SUVs or pickup trucks. And no one needs more than 4-cylinders, especially if they are turbocharged engines. My Saabs all get 30+ mpg (except when I take the fastest one to the track!)

Jami

All 18 of my children have heard the tale of the troll under the bridge. Now the troll has a name!

Large vehicles transporting many people are more fuel-efficient than several small vehicles transporting a few. That's as true for families as for any other group.

Belly

Sorry Jami, no they are not more fuel efficient. A vehicle is less fuel efficient when carrying a large load.

And that is great that you have 18 kids. Hopefully they all feel loved, respected, and appreciated.

But Tony's point, while made somewhat abruptly, is more of the idea that if every keeps having 18 kids where is that going to lead... I'd rather that not happen, but if it does then so be it.

jstant01

Jami - I think your math works to a point, and obviously unless you have some kind of mini-bus, there's nothing out there that's going to carry ALL of your family in one load.

I refer back to my previous point - large vehicles make sense for large families. When I was commuting 80 miles every day in my compact, 36mpg car, I was surrounded by SINGLE drivers in Suburbans, F-150s, Durangos, Expeditions, etc. That does NOT make sense. If they have a big enough family for one of those, then they can probably afford to also have a small fuel-efficient car for when they are driving to work alone.

Your blog post is full of information. You have represented your thought and graphs nicely.

How you managed to turn an informative article into an interesting piece of writing is beyond me, but you did it. I am truly impressed with your work. I agree on most of this information.

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