Four years ago, vehicle shoppers were more concerned about the number of cupholders in a vehicle than its fuel economy, says auto analyst Anthony Pratt, citing a consumer survey.
Times have changed.
“People are really concerned about fuel economy today,” Pratt, a senior analyst at PricewaterhouseCoopers, says here during an industry panel discussion that is part of Northwood University's annual student-run auto show on the campus in Midland, MI.
He outlines how car-buying dynamics have changed in various ways, contrasting those that existed before the recession with the ones at work now.
Pre-recession, car buyers enjoyed easy access to credit. Now, credit is tight, with lenders using stricter standards and looking closer at a prospective borrower's debt-to-income ratio, Pratt says.
Before, consumers tended to replace their vehicles on short buying cycles, taking advantage of hefty incentives offered by auto makers. Now, incentives are less generous and people keep their vehicles longer before buying new ones.
Pratt also points to a “perceived need” that was more prevalent before the economic downturn that has led to light-vehicle sales going from 16.1 million units in 2007 to 13.2 million in 2008 to a predicted 10 million this year.
“Many times, that perception suited a self-image, such as the guy driving a Ford F-250 pickup truck to the office to project manliness,” Pratt says.
Buyers today are more prone to pick a car based on real need. But not entirely, says Joe Lescota, Northwood's automotive marketing chairman.
“Car buying is emotional,” he says. “When it comes down to it, do we really need sunroofs, 16-position power seats and heated seats? If we were buying based on logic alone, the answer would be, ‘No.’”
As for improving fuel economy, it's now a big concern for government, as well as consumers, says Pratt, pointing to a Congressional mandate that auto makers reach a corporate average fuel economy of 36 mpg (6.5 L/100 km) in seven years.
“Were we not in the throes of a recession, CAFE would be the big story,” he says. “How do you get to 36 mpg by 2016?”
“Enablers” include advances in vehicle downsizing, direct injection, cylinder deactivation and variable compression, Pratt says.
Alternative fuels will play a role, too, but “for years to come we will continue to see vehicles use fossil fuel,” especially if consumers “do the math” and determine that a gasoline-powered car costs less, he says.