Study: Do Gas Prices Influence Consumer Behavior When Buying Cars?
Gas prices have remained at a thrillingly low rate for the past six months. Throughout this time, we’ve been hearing the baffling news reports that purchases of gas-guzzling vehicles have been increasing. Could that be true? Could the steep decline in gas prices over the past months affect consumer behavior in the car-buying market?
Two recent studies address this question, each shedding light on the habits of automobile consumers.
Conflicting Studies Provide Intriguing Look at Consumer Behavior
According to a January study by Phoenix Marketing International that was released this week, drivers admit to a slight, short-term change in driving habits due to low gas prices, but little change in purchase intentions.
In total, 1,629 US consumers in the market for a new vehicle, or who recently purchased one, were polled for their opinions on declining gas prices. The demographics were varied, including customers interested in all 35 major auto brands.
Of those polled:
- 97% of all consumers are aware of the gas price drop.
- 21% claimed the decline in gas prices slightly impacted driving habits, 22% said they drive more frequently since the gas prices fell, and 26% reported no change in driving frequency.
- 11% said they accelerate faster and burn more fuel now, compared to 46% who say acceleration habits haven’t changed.
- 26% claim they plan on taking more and/or longer trips due to low gas prices, while 21% won’t change their vacationing habits.
The most intriguing result from this study finds that younger consumers are more sensitive to changes in gasoline prices than older consumers. Those between the ages of 18 and 45 are far more likely to increase driving frequency when gas prices decline (32%) than those over 46 years old (13%). Younger drivers will accelerate more (18% vs 4%), and they’re more likely to plan longer trips involving more driving (36% vs. 16%).
But the bottom line finds that two-thirds of consumers believe low gas prices are temporary and will not impact their choice of vehicle purchases. Phoenix analyst Will Fetcenko summarized, “Most consumers still believe that gas prices will return back to their ‘normal’ higher range, and that they should not make future purchase decisions based on these temporary dips in pricing.”
However, claimed behavior and actual behavior can differ sometimes.
ISeeCars.com had a more extensive survey, analyzing 27 million used cars which were purchased over three years (2012 – 2014). During that time, more pickup trucks were purchased when gas prices were lower–an increase of 2% in sales for every dollar the gas price decreased. Conversely, for each dollar gas prices increased, passenger car sales increased about 2%.
When gas prices were high, consumers bought more fuel-efficient vehicles, and vice versa. However, the vehicles in question had only slightly improved fuel efficiency numbers, as opposed to the substantial leaps you’d get in hybrid vehicles. There was also no conclusive relationship between gas prices and purchases of electric vehicles.
The results of these two studies vary somewhat, but perhaps that’s insight into human tendencies. We may claim gas prices don’t affect our purchases, but when it comes to buying the vehicle we truly desire, we’ll go against what our good judgement suggests.