US: February 1, 2008


DETROIT - Pricey gasoline drives US car buyers to more fuel-efficient vehicles, according to a study by industry tracking service Edmunds.com released Wednesday.


Shoppers looking at cars and light trucks become more sensitive when prices rise above an average national price of US$2.80 a gallon, according to Edmunds.com Executive Director David Tompkins, who called that level a "psychological turning point for consumers."

The average US retail price for gasoline stands at US$2.98 a gallon, the Energy Information Administration said Monday in its weekly survey of service stations. While that was the first time below US$3 a gallon in five weeks, it was still 81 cents higher than a year ago.

High gas prices is a major reason for the declining sales of many large sports-utility vehicles and pickup trucks, and weak consumer confidence due to the credit market crunch and slumping housing sector have depressed US auto sales.

In a separate survey released Wednesday by the Massachusetts-based Civil Society Institute think tank and its 40MPG.org project that pushes for more fuel-efficient vehicles, more than half of Americans said they would reduce holiday travel and personal spending if gas prices hit US$4 a gallon this year.

More than half also cited fuel prices as the top economic worry this year, according to the institute's study.

The US Energy Department is forecasting high crude oil costs will push gas prices to a record US$3.50 this spring when driving normally increases, and 71 percent of those surveyed by the institute expect prices to hit US$4 this summer.

Edmunds.com found if gas hits US$4 a gallon, consumer interest in hybrid-powered vehicles would jump five-fold.

Under that scenario, interest in traditional mid-sized SUVs, large SUVs and large trucks would decline at rates of 35 percent, 34 percent and 26 percent, respectively, according to the study.

Meanwhile, interest in luxury cars and luxury SUVs, many of which are among the least fuel-efficient models, would fall 15 percent, the study said. Edmunds.com said the smaller decline was likely due to buyers of such vehicles being less sensitive to gas price increases.

Edmunds.com also found brand imagery would play an important role with gas at US$4 a gallon as models perceived to be more fuel efficient -- even when they are not -- would receive more consideration from consumers.

For example, Japanese trucks would fare better than domestic ones even though US trucks tend to be more fuel efficient, and the Saturn Aura Hybrid would fare better than the Chevrolet Malibu Hybrid even though the two vehicles made by General Motors Corp generally achieve the same fuel efficiency, according to the study. (Reporting by Ben Klayman, editing by Richard Chang)


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