How quick we forget?

Even though the average fuel price has increased 80 cents per gallon to $2.69 from year ago, the effect on buyers’ choices appears to be perverse.

The latest survey shows that interest is decining in small cars and hybrid vehicles is when compared with a year ago when memories of $4 a squirt gasoline were still fresh in buyer’s minds.

This shift comes as pending federal regulations dictate a corporate average of 35.5 mpg (6.63 L/100 km) for new vehicles sold by 2016, and this will require that cars achieve 42 mpg on average.

(Click here for Administration Rolls Out New Fuel Economy Rules)

Fuel up, but small car consideration is dropping?

Whether the latest data reflect a short-term aberration among potential buyers, or the acceptance by buyers of higher fuel prices, the problem for automakers remains the same – the mix of vehicles they need to sell to comply with the law is discordant with what people are actually interested in buying.

Consider this from auto consultancy Auto Pacific: When asked what kind of vehicle would be selected to replace their primary vehicle last January,  24% of respondents said a Small Car. By June 2009, Small Car “consideration” had fallen by a third to 16%, and fell another third to 12% in January 2010.

Put another way, in one year, consideration for Small Cars has fallen by half, as the price of fuel went up.

The shift in hybrid “intenders” is even more dramatic — down from 25% a year ago, to 14% six months ago, to 11% in January 2010.

Now, there likely is some noise in this data given the well- publicized quality and safety problems at Toyota, the world’s leader in  hybrid technology and a big player in the small car market, but if this reflects an actual trend,  buyers are turning away from proven, and high fuel economy vehicles.

(See the March issue of Road & Track magazine, which answers this question – Are Hybrids Really That Good? Exec summary: yes. Caveat: I used to work for R&T, but this is a serious test nonetheless that shows the Toyota Prius thumping the much smaller Ford Fiesta and the more expensive VW diesel by an average of 14 miles per gallon.)

The Return of Trucks and SUVs?

These small car results are contrasted by the replacement vehicle intention with respect to SUVs in the survey: 16% a year ago, 20% six months ago, and 26% in January 2010 — for an increase of 63%.

Pickup truck intention follows a similar pattern: 10% a year ago, 12% six months ago and 15% this January – for a 50% increase.

“What a short memory we have” said Jim Hossack, the study’s author.

We also have the potential of another government policy fiasco. Without some floor on fuel prices, and without what seems to be a politically impossible tax on fuel, we are headed the same road we took after the two preceding fuel crises. Not only is our fragile economy at risk, but national security is threatened as well.

Remember?

(Click here for: Here We Go Again: With Crude Oil at Record 2009 Prices, Where is Our Energy Policy?)