ATLANTA and IRVINE, Calif. -

Shopper analysis by AutoTrader.com and Kelley Blue Book showed consumers don’t appear to be taking climbing fuel prices lightly.

As the average price of gas approaches $3.50 per gallon nationwide, the majority of vehicle shoppers at both AutoTrader.com and Kelley Blue Book’s Kbb.com are seriously considering fuel prices during the process.

AutoTrader.com found on its site that 53 percent of February shoppers said they are more likely to consider a more fuel-efficient vehicle rather than the one they currently own as a result of rising fuel prices.

To put that level into context, AutroTrader.com determined that rate is higher than a similar survey the site conducted in August and September of 2008 during the last gas-price spike. The rate then was 44 percent.

AutoTrader.com explained that gas prices have been creeping up for several months as a result of the economic recovery, which has created more demand. More recently, analysts believe events in the Middle East have created concerns on world markets that have caused a run up in crude oil prices, with a resulting increase in prices at the pump.

The site pointed out many reports and analysts say prices at the pump will continue to rise and may surpass $4 per gallon across the country — a price threshold that has already been passed in some markets.

“This survey indicates what we expected based on previous gas-price spikes,” noted AutoTrader.com president and chief executive officer Chip Perry.
“When gas prices rise, interest on our site in smaller and more fuel-efficient vehicles increases. When gas prices go back down, shoppers return to their normal shopping habits,” Perry continued.

“The fact is, a large segment of the American car-shopping public likes and wants larger vehicles to accommodate their auto needs and wants,” he went on to say. “Consumers consider many things when shopping for a car — things like style, utility, price, fuel economy and more. The current spike in gas prices has put fuel-economy closer to the top of many shoppers’ lists right now."

Perry contends automakers are in a better position to meet consumer demand for more fuel-efficient vehicles than they were in previous periods of rising gas prices.

“Manufacturers have seen consumer interest in fuel efficiency and have responded by bringing out stylish small cars and also by using technology and design solutions to squeeze more miles per gallon out of larger cars,” Perry surmised.

“Consumers looking for fuel efficiency in their vehicles today will find many more options than they had in the past,” he added.

In connection with its February survey, AutoTrader.com found 21 percent strongly agreed with this statement: “I am more likely to consider a more fuel-efficient car the next time I am in the market to buy a car due to rising gas prices.”

The site discovered another 32 percent somewhat agreed with that sentiment while another 30 percent didn’t have an opinion either way.

Comprising the minority were the 12 percent of respondents who somewhat disagreed and the 5 percent who strongly disagreed.

Analysts mentioned their survey was conducted among visitors to AutoTrader.com during February.

KBB Finds Strong Shopper Connection to Gas Prices

Meanwhile according to the latest Kelley Blue Book Market Intelligence survey concerning consumer sentiment and gas prices, analysts contend the current economic situation coupled with concern over the rise in fuel cost has caused an increasing number of new- and used-vehicle shoppers to change their vehicle consideration criteria.

In February, KBB found that four out of five shoppers — 81 percent to be exact — said that gas prices have influenced vehicle considerations, up 11 percentage points over January. Analysts pointed out the current national average for gas prices has increased by 29 cents in the last month, and 74 percent of the latest Kbb.com survey respondents indicated they expect gas prices to rise more in the next 30 days.

When asked about the effect of the economy on their future vehicle purchases, 58 percent of Kbb.com survey respondents noted the economy has caused them to make downgrades. KBB found the most popular downgrade listed was decreased engine size (42 percent), followed by decreased vehicle size (40 percent), decreased or eliminated vehicle options (37 percent), and switching from new to used (33 percent).

Moreover, Kelley Blue Book discovered the number of respondents indicating that their current economic situation is “poor” increased by 7 percentage points from January to February, up to 27 percent from 20 percent. 

The site determined respondents who reported having a poor economic situation were more likely to report needing a unit with better fuel economy (21 percent) as the top reason for planning to purchase their next vehicle. KBB also learned those rating their current economic situation as “poor” were more likely to report intentions of vehicle purchase within one month, indicating that their purchase is likely need-based.

Additionally, survey respondents indicating that their current economic situation is poor were more likely to report decreased spending on major purchases (84 percent), spending on non-essentials (82 percent), travel (80 percent), dining out (78 percent) and leisure activities (78 percent).

Analysts reiterated that Kelley Blue Book Market Intelligence employed the Van Westendorf pricing model as a research strategy to understand consumers’ price sensitivity toward gas prices. They discovered that the current optimum price point for gasoline, $3 per gallon (with an acceptable range of pricing from $2.75 to $3.25), has not changed from January from February.

Therefore, if prices remained around $3 per gallon, KBB thinks vehicle shoppers likely would not make major changes in consideration criteria. However, at the $3.50 per gallon price point, analysts believe more than half of consumers will feel that gas is so expensive it will affect their vehicle consideration.

And at $4 per gallon, Kelley Blue Book pointed out that 80 percent of consumers say their vehicle consideration will be affected. And at a price point of $5 per gallon, the site declared almost all shoppers (95 percent) reveal that gas prices will affect vehicle consideration. 

The current national gas price average of $3.39 per gallon exceeds the current price sensitivity threshold of consumers. As a result, Kelley Blue Book already has seen increased interest in fuel-efficient and alternative-fuel vehicles on its website.

KBB found the compact car segment has increased its share of new-car shopping activity by 9 percent month-over-month, which is the largest increase of any segment. So far, hybrids have seen only a minimal gain of increased share 1 percent month-over-month

Kelley Blue Book Market Intelligence analysts predict that as long as gas prices continue to increase in the coming weeks and months, interest in fuel-efficient and alternative-fuel vehicles will continue to rise. However, if gas prices stabilize for a few months, they think interest in fuel-efficient and alternative-fuel vehicles will decrease and stabilize as well.

“Consumers frequently make long-term decisions, like buying a vehicle, based on short-term information, like today’s fuel prices,” explained Jack Nerad, executive editorial director and executive market analyst for Kelley Blue Book.

“We’ve seen rising fuel prices affect shopping behavior at Kbb.com many times before, and we’re seeing it again today,” Nerad continued. “The increased interest in fuel-efficient vehicles and decreased interest in larger ‘gas guzzlers’ typically foreshadows corresponding changes in buying behavior, and we expect the pattern to continue if gas prices continue to trend upward in the coming months.

“As a result, auto manufacturers need to not only prepare products that anticipate long-term trends, but also be prepared to cater to short-term variations in consumer demand,” Nerad advised.

The latest Kelley Blue Book Market Intelligence survey about consumer sentiment and gas prices was fielded to 380 in-market new- and used-car shoppers on Kbb.com from Feb. 11-14.