Study Finds Higher Fuel Costs Don’t Lead Consumers to Buy Smaller Vehicles

It’s a prediction that even experienced economists make the mistake of putting forth: as gas prices rise, consumers will turn to smaller, more fuel-efficient cars. Makes, sense…right?

But it doesn’t work that way.

According to a new report by the Fuels Institute, a unit of the National Association of Convenience Stores (NACS), consumers have three things in mind when they purchase vehicles: utility, affordability and efficiency, and they’re increasingly finding these factors not in small sedans, but in crossover utility vehicles (CUVs). The research is based on 15 years of vehicle sales data and 13 years of retail fuel prices.

“The notion that higher fuel prices lead consumers to purchase smaller, more fuel-efficient vehicles, while lower prices encourage the purchase of larger, less fuel-efficient vehicles is not supported by the data,” John Eichberger, executive director of the Fuels Institute, said in a statement. “Consumers buy vehicles based on what they need and want and what they can afford. This combination has resulted in an overwhelming shift in the composition of the light-duty vehicle market to cross utility vehicles (CUVs).”

The report, entitled “Vehicle Sales and Fuel Prices,” noted that that a major shift in the light-duty vehicle market occurred from 2003 through 2017, which corresponds with the rise of the crossover utility vehicle. During these years, market share of CUVs tripled from 10 to 35 percent. (For the purpose of the research, a crossover is defined as being built on a car’s platform, while an SUV uses the chassis of a truck.)

While research from auto industry forecaster LMC Automotive has estimated that SUVs, including crossovers, will be about 50 percent of all vehicle sales by 2022, the Fuels Institute Report notes that when broken out into separate categories, sales of CUVs have climbed and sales of SUVs have declined.

“Unbiased, fact-based research is necessary for aligning policy objectives with market realities,” stated Eichberger. “These findings can help inform policymakers tasked with setting fuel economy standards and industry leaders who are considering long-term investments in their retail fueling operations.”