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Published on June 25th, 2008 | by Clayton

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Are Automakers To Blame For Consumer Car-Buying Trends? Auto Alliance Weighs In

Hummer

Editors Note: This guest post was contributed by Charley Territo, spokesperson for the Alliance of Auto Manufacturers, in an effort encourage better dialogue between the auto industry and the environmental movement. Charley also contributed a guest post on Grist on May 20. I asked him to weigh in on a question I’ve had for a long time: How can automakers like GM complain that consumers only want to buy big cars when they spend hundreds of thousands advertising brands like Hummer? Here is his response. Feel free to weigh in with your own comments below.

For years it’s been assumed that, using their superior marketing skills, automakers have the ability to trick consumers into buying SUVs and pickup trucks…when, in reality, the consumers really only

wanted to buy compact cars.  While that’s probably quite flattering to the marketing departments, it doesn’t have the important benefit of actually being correct.

Current events are now allowing people to see more clearly the greater force at work driving consumer demand: Gas prices.

Gas just pushed past $4 a gallon – a record high.  With no drop on the horizon, customers are adjusting not only their driving habits but their purchasing patterns, as well.

The last time the average gas price in a given month constituted a record high, it was May 2007.  Incidentally, that is also the only month in the five years prior to March 2008 in which consumers

purchased more passenger cars than they did light trucks. That is not a coincidence.

Think about that: years have been spent trying to legislate incremental increases in fuel economy standards.  But the recent rise in gas prices has succeeded in changing the fuel efficiency of the new automobile fleet without any government intervention. The lesson here is very important: when consumers became a part of the equation, both consumers and the auto industry will respond. . .and this response is faster and more effective than artificial regulation. But let’s be clear, though: the auto industries response did not happen overnight.  In fact, the auto industry has been working toward this for many years now.

For years, automakers have been touting the more than 100 models that achieve fuel economy ratings of more than 30 mpg on the highway.  For years, they have been introducing alternative fuel autos like hybrid electric, ethanol capable e-85, clean diesel and more to prepare for a time when consumers valued fuel economy the way they valued attributes like towing capacity, 4 wheel drive, cargo room, safety, performance and styling.

That time has arrived.

Automakers have been preparing for that shift, and they are working even harder now that it is arriving,.  They are increasingly changing their product lineups to meet the challenge, and more and more fuel efficient autos will be introduced in the future.  By the end of next year more than 50 new models of hybrids are expected to be available, and the sales of clean diesel vehicles are expected to grow from less than 1% of sales today to 10-15% by 2015.  Last year more than 1 million ethanol capable ffvs (flex-fuel vehicles) were sold in the U.S with the increased renewable fuels standard included as part of last year’s energy bill.  That number will continue to grow.

The U.S. is not one size fits all, though.  If real progress is going to be achieved on fuel efficiency, consumer incentives are important.

Remember these points:

  • What works in one part of the country doesn’t always work in another.
  • The fuels available in one part of the country aren’t always available in another.
  • The vehicles that are popular in one part of the country aren’t always popular in another.

That’s why automakers believe that the best way to enhance our energy security, save money at the pump and reduce our carbon dioxide emission is through the use of diverse fuels and diverse autos. No one likes to pay more for gasoline. . .or for that matter food, airline tickets or any other consumer good.  But higher prices force consumers to make decision about their habits that otherwise wouldn’t be made.  For now it looks like high gas prices and demand for more

Fuel efficient cars are here to stay.  Automakers are ready to respond with cleaner, safer and more fuel efficient vehicles than ever before, proving once again that the market will respond faster than incremental government mandates.

Photo Credit: rick on Flickr under Creative Commons License.




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About the Author

In a past life, Clayton was a professional blogger and editor of Gas 2.0, Important Media’s blog covering the future of sustainable transportation. He was also the Managing Editor for GO Media, the predecessor to Important Media.



  • http://homeinbabylon.com Chuchundra

    Oh please. The SUV as a luxury vehicle was a creation of the auto industry marketers as surely as the diamond engagement ring was a creation of DeBeers. The SUV was created to exploit a loophole in the CAFE standards, then these high profit vehicles were sold to the public as luxury goods.

    Go ahead and try to blame the consumers for this if you like. Let me know how that works out for you.

    Yes, $4 a gallon gas is forcing automakers to scramble and come up with more fuel efficient vehicles, but if Detroit had not fought increased CAFE standards tooth and nail then we’d be in a lot better shape.

  • http://homeinbabylon.com Chuchundra

    Oh please. The SUV as a luxury vehicle was a creation of the auto industry marketers as surely as the diamond engagement ring was a creation of DeBeers. The SUV was created to exploit a loophole in the CAFE standards, then these high profit vehicles were sold to the public as luxury goods.

    Go ahead and try to blame the consumers for this if you like. Let me know how that works out for you.

    Yes, $4 a gallon gas is forcing automakers to scramble and come up with more fuel efficient vehicles, but if Detroit had not fought increased CAFE standards tooth and nail then we’d be in a lot better shape.

  • Uncle B

    Bigger cars were purported to be safer in a major crash. This is an easy and obvious sell. Whisper in the potential buyers ear, at that critical moment, “and this is the safest car/truck we have in the showroom” and the dotted line gets signed! – The biggest lie is the one told about diesel! It takes extra energy to crack the larger portion of a barrel of oil to gas, and gas , unlike diesel requires additives to burn properly, an extra expense, but we can’t get diesel for a fair price at the pumps in America anymore because the refiners can make more on gas!

  • Uncle B

    Bigger cars were purported to be safer in a major crash. This is an easy and obvious sell. Whisper in the potential buyers ear, at that critical moment, “and this is the safest car/truck we have in the showroom” and the dotted line gets signed! – The biggest lie is the one told about diesel! It takes extra energy to crack the larger portion of a barrel of oil to gas, and gas , unlike diesel requires additives to burn properly, an extra expense, but we can’t get diesel for a fair price at the pumps in America anymore because the refiners can make more on gas!

  • James Sterling

    “For years, they have been introducing alternative fuel autos like hybrid electric, ethanol capable e-85, clean diesel and more”

    LOL

    “for years.” this article is desperately vague for one that starts out by asserting that the automakers are not responsible for marketing gaz-guzzlers.

  • James Sterling

    “For years, they have been introducing alternative fuel autos like hybrid electric, ethanol capable e-85, clean diesel and more”

    LOL

    “for years.” this article is desperately vague for one that starts out by asserting that the automakers are not responsible for marketing gaz-guzzlers.

  • sidewinder

    Upton Sinclair said “It is difficult to get a man to understand something when his job depends on not understanding it.”

    Perhaps that is why Mr Territo has so little understanding of the intentions of automakers to push larger cars & discourage smaller cars thru design & advertising over a period that stretches unbroken since the fuel crunch of the Carter Administration.

    That was the shot across the bow – this shot is amidships.

    The populous is realizing that we have essentially used up the worlds reserves of petroleum in a little more than 100 years & that there is not another 100 years supply remaining to exploit. No amount of advertising can overcome that. Hence, the flight from large vehicles.

    And, while it is true that there are different vehicle needs in different parts of the country, you can bet that automakers will throw the farmers & contractors with legitimate needs for light trucks right under the bus when it comes time to service the 90% of drivers who don’t need em & can’t be convinced to buy em.

    “Automakers are ready to respond …” – they’ve had 25 years to get ready but they’re still looking like a deer in headlights to me.

  • sidewinder

    Upton Sinclair said “It is difficult to get a man to understand something when his job depends on not understanding it.”

    Perhaps that is why Mr Territo has so little understanding of the intentions of automakers to push larger cars & discourage smaller cars thru design & advertising over a period that stretches unbroken since the fuel crunch of the Carter Administration.

    That was the shot across the bow – this shot is amidships.

    The populous is realizing that we have essentially used up the worlds reserves of petroleum in a little more than 100 years & that there is not another 100 years supply remaining to exploit. No amount of advertising can overcome that. Hence, the flight from large vehicles.

    And, while it is true that there are different vehicle needs in different parts of the country, you can bet that automakers will throw the farmers & contractors with legitimate needs for light trucks right under the bus when it comes time to service the 90% of drivers who don’t need em & can’t be convinced to buy em.

    “Automakers are ready to respond …” – they’ve had 25 years to get ready but they’re still looking like a deer in headlights to me.

  • http://interestingtimes.blogspot.com Chris Andersen

    $4 a gallon gas is forcing consumers and auto makers to adjust their habits. But to argue that it is doing it “faster” than it would have happened if the government had intervened (via higher CAFE standards) is an untenable proposition. How do you define “faster” in this case? If the government had required 35mpg cars standard 10 years ago then we certainly would have been at 35mpg cars “faster” wouldn’t we?

  • http://interestingtimes.blogspot.com Chris Andersen

    $4 a gallon gas is forcing consumers and auto makers to adjust their habits. But to argue that it is doing it “faster” than it would have happened if the government had intervened (via higher CAFE standards) is an untenable proposition. How do you define “faster” in this case? If the government had required 35mpg cars standard 10 years ago then we certainly would have been at 35mpg cars “faster” wouldn’t we?

  • http://www.autoalliance.org/ Charley Territo

    Uncle B says “Bigger cars were purported to be safer in a major crash. This is an easy and obvious sell”, as if safety is just a marketing trick. That’s just not the case. Consumers are not being tricked into thinking safety is one important consideration, and we don’t have to “whisper” the facts about safety. In fact, we voluntarily cooperate with public safety organizations which publicize the results of their research into the safety of our products. That’s not “whispering” – that’s transparency.

    Regarding diesel, the truth is that we would be glad to have more opportunity to sell diesel fuel cars in America. Unfortunately, as we pointed out over at Grist, the truth is that it is government regulations and tax policy that reduce the diesel market in America. That is an unfortunate unintended consequence of hasty and ill-considered environmental regulation.

    The commenter “sidewinder” seems anxious to take a shot at me, but the fact is that the oil market supply/demand issues he describes are exactly what is driving the shift in consumer demand. And far from being “deer in the headlights”, the auto industry has been producing alternative fuel vehicles for years now. It is the market, driven by higher gas prices, that is finally catching up with the fuel efficient products we have made available. The consumer shift you describe is currently happening precisely because we anticipated it and began preparing cars to meet that demand many years ago.

  • http://www.autoalliance.org/ Charley Territo

    Uncle B says “Bigger cars were purported to be safer in a major crash. This is an easy and obvious sell”, as if safety is just a marketing trick. That’s just not the case. Consumers are not being tricked into thinking safety is one important consideration, and we don’t have to “whisper” the facts about safety. In fact, we voluntarily cooperate with public safety organizations which publicize the results of their research into the safety of our products. That’s not “whispering” – that’s transparency.

    Regarding diesel, the truth is that we would be glad to have more opportunity to sell diesel fuel cars in America. Unfortunately, as we pointed out over at Grist, the truth is that it is government regulations and tax policy that reduce the diesel market in America. That is an unfortunate unintended consequence of hasty and ill-considered environmental regulation.

    The commenter “sidewinder” seems anxious to take a shot at me, but the fact is that the oil market supply/demand issues he describes are exactly what is driving the shift in consumer demand. And far from being “deer in the headlights”, the auto industry has been producing alternative fuel vehicles for years now. It is the market, driven by higher gas prices, that is finally catching up with the fuel efficient products we have made available. The consumer shift you describe is currently happening precisely because we anticipated it and began preparing cars to meet that demand many years ago.

  • Lucretius

    The comments to this article are simply wrong:

    ———-

    Chuchundra: “The SUV as a luxury vehicle was a creation of the auto industry marketers as surely as the diamond engagement ring was a creation of DeBeers.”

    ———-

    Uncle B: “Whisper in the potential buyers ear, at that critical moment, “and this is the safest car/truck we have in the showroom” and the dotted line gets signed!”

    ———-

    Sidewinder: “Mr Territo has so little understanding of the intentions of automakers to push larger cars & discourage smaller cars thru design & advertising over a period that stretches unbroken since the fuel crunch of the Carter Administration.”

    ———-

    Advertising is not some all-powerful force that robs the consumer of free will making him a economic zombie in the service of ‘big-business’! Each consumer was responsible for the fuel-economy trade-offs that were incorporated into their vehicles at the time of purchase. If, in the light of changed fuel prices, such vehicles seem suboptimal, it doesn’t mean they aren’t still responsible for their own choices.

  • Lucretius

    The comments to this article are simply wrong:

    ———-

    Chuchundra: “The SUV as a luxury vehicle was a creation of the auto industry marketers as surely as the diamond engagement ring was a creation of DeBeers.”

    ———-

    Uncle B: “Whisper in the potential buyers ear, at that critical moment, “and this is the safest car/truck we have in the showroom” and the dotted line gets signed!”

    ———-

    Sidewinder: “Mr Territo has so little understanding of the intentions of automakers to push larger cars & discourage smaller cars thru design & advertising over a period that stretches unbroken since the fuel crunch of the Carter Administration.”

    ———-

    Advertising is not some all-powerful force that robs the consumer of free will making him a economic zombie in the service of ‘big-business’! Each consumer was responsible for the fuel-economy trade-offs that were incorporated into their vehicles at the time of purchase. If, in the light of changed fuel prices, such vehicles seem suboptimal, it doesn’t mean they aren’t still responsible for their own choices.

  • Some Knucklehead

    Of course they are. They design and build the vehicles we have to buy. If we were to deign and build our own, they would all look like Ferarris.

  • Some Knucklehead

    Of course they are. They design and build the vehicles we have to buy. If we were to deign and build our own, they would all look like Ferarris.

  • Kirk

    I’m not so sure. Apparently the high gas prices are affecting consumer satisfaction (http://blog.buyingadvice.com/2008/06/fuel-prices-aff.html). It’s probably somewhere in the middle. Manufacturers pushed cheap to make SUVs off on a public that was too embarrassed to drive station wagons and minivans.

    Really, it comes down to vanity. Most Americans only need either a a) compact car b) station wagon c) minivan or d) pickup truck. But since practical isn’t cool in this country, we go around chasing idiotic trends to the brink of destruction.

  • Kirk

    I’m not so sure. Apparently the high gas prices are affecting consumer satisfaction (http://blog.buyingadvice.com/2008/06/fuel-prices-aff.html). It’s probably somewhere in the middle. Manufacturers pushed cheap to make SUVs off on a public that was too embarrassed to drive station wagons and minivans.

    Really, it comes down to vanity. Most Americans only need either a a) compact car b) station wagon c) minivan or d) pickup truck. But since practical isn’t cool in this country, we go around chasing idiotic trends to the brink of destruction.

  • http://gas2.org Clayton B. Cornell

    I feel like a few things have been glossed over here, including the fact that gas prices in this country have always been artificially low. How can anyone argue that the “market” can manage itself without Govt. regulation when it it’s never adapting to realistic variables?

    Why wouldn’t we want to encourage change anyway, by artificially manipulating the variables in a way that provides value and security for our future?

    Example: Thomas Friedman proposes a “price floor” of $4 / gallon for gasoline: http://www.nytimes.com/2008/05/28/opinion/28friedman.html

  • http://gas2.org Clayton B. Cornell

    I feel like a few things have been glossed over here, including the fact that gas prices in this country have always been artificially low. How can anyone argue that the “market” can manage itself without Govt. regulation when it it’s never adapting to realistic variables?

    Why wouldn’t we want to encourage change anyway, by artificially manipulating the variables in a way that provides value and security for our future?

    Example: Thomas Friedman proposes a “price floor” of $4 / gallon for gasoline: http://www.nytimes.com/2008/05/28/opinion/28friedman.html

  • chrispc88

    Chuchundra – Try digging up some facts before you speak. You said “The SUV was created to exploit a loophole in the CAFE standards”. CAFE standards weren’t enacted in the US until 1975 – but SUV’s have been around for much longer. Oh’ sure they may not have been called ‘sport utility’ but they were the same vehicles. Take the Chevy Blazer for instance, it first appeared in 1969. The Arab Oil Embargo didn’t show until 1973. The Ford Bronco was first started in 1966. And of-course Jeeps have been around since the second world war. Face it, the vehicles exist because there are people that want and or need them for any number of reasons and have for years.

  • chrispc88

    Chuchundra – Try digging up some facts before you speak. You said “The SUV was created to exploit a loophole in the CAFE standards”. CAFE standards weren’t enacted in the US until 1975 – but SUV’s have been around for much longer. Oh’ sure they may not have been called ‘sport utility’ but they were the same vehicles. Take the Chevy Blazer for instance, it first appeared in 1969. The Arab Oil Embargo didn’t show until 1973. The Ford Bronco was first started in 1966. And of-course Jeeps have been around since the second world war. Face it, the vehicles exist because there are people that want and or need them for any number of reasons and have for years.

  • Crawford

    People keep saying how ethanol cars are so great. They are not! They may reduce foreign dependence, but it just moves our dependence from the middle east down to the Rainforest. AND, with a higher demand of ethanol, more rainforest is being cut down for farmers to have more room to grow crops for highly profitable biofuels. As most of you should know… cutting down rainforest is the worst thing you can do for the environment. First off it’s killing the most valued ecosystem on the planet, some huge percentage of all CO2 emissions are taken in by plants in the rainforest, and rainfalls all over the world depend on the rainforest. That is part of the reason why here in the U.S. the east coast was having droughts, which the west coast was getting flood waters everywhere.

  • Crawford

    People keep saying how ethanol cars are so great. They are not! They may reduce foreign dependence, but it just moves our dependence from the middle east down to the Rainforest. AND, with a higher demand of ethanol, more rainforest is being cut down for farmers to have more room to grow crops for highly profitable biofuels. As most of you should know… cutting down rainforest is the worst thing you can do for the environment. First off it’s killing the most valued ecosystem on the planet, some huge percentage of all CO2 emissions are taken in by plants in the rainforest, and rainfalls all over the world depend on the rainforest. That is part of the reason why here in the U.S. the east coast was having droughts, which the west coast was getting flood waters everywhere.

  • http://gas2.org Clayton B. Cornell

    Crawford,

    Make sure you aren’t conflating corn with biodiesel. Corn is not related to rainforest destruction in any way that I’m aware of.

    But biodiesel can be: http://gas2.org/2008/04/11/biodiesel-myth-or-fact-23-biodiesel-is-raising-food-prices/

  • http://gas2.org Clayton B. Cornell

    Crawford,

    Make sure you aren’t conflating corn with biodiesel. Corn is not related to rainforest destruction in any way that I’m aware of.

    But biodiesel can be: http://gas2.org/2008/04/11/biodiesel-myth-or-fact-23-biodiesel-is-raising-food-prices/

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