Toronto, Ontario – A new Global Auto Report released by Scotia Economics has found that this year’s surge in gasoline prices, to a record US$4.00 per gallon in the United States, has set off a dramatic shift in vehicle buying patterns in that country that matches the adjustment that occurred in the oil shock of the late 1970s and early 1980s.
“With Americans abandoning their gas-guzzling SUVs and pickup trucks for small, more fuel-efficient vehicles, we estimate that the average fuel efficiency of this year’s fleet has climbed by nearly 20 per cent from the previous model year, a level matching the improvement that occurred in 1980 when inflation-adjusted oil prices were approaching $100 per barrel,” said Carlos Gomes, Scotiabank Senior Economist and Auto Industry Specialist.
The report states that based on sales through May, the fuel efficiency of vehicles bought in the U.S. so far this year has increased to an average of 24.4 mpg (9.7 L/100 km), up from 20.2 mpg (11.8 L/100 km) in 2007 and an average of 19.8 mpg (12.2 L/100 km) during the past decade.
“With Americans increasingly buying small cars, this segment became the largest in the United States last month, surpassing both midsize cars and pickup trucks,” Gomes said. “Small cars now account for one-quarter of overall U.S. sales (cars and light trucks), up from 16 per cent in 2007 and an average of 14 per cent in the 2002 to 2006 period. In fact, small cars and fuel-efficient crossover utility vehicles now account for 42 per cent of the U.S. market, up from 30 per cent in 2006 and double their share as recently as 2001. In contrast, gas-guzzling pickups and SUVs have slumped to only 19 per cent of overall U.S. volumes, down from a peak of 36 per cent in 2001.”
The report states that, despite the dramatic change in U.S. vehicle buying patterns, the fuel efficiency of the current U.S. vehicle fleet is still more than 40 per cent short of the requirement set out in last year’s landmark U.S. energy bill.
“Meeting these targets requires not only a further significant shift towards smaller vehicles, but also sizeable new investments by automakers in everything from hybrids to plug-in gas-electric vehicles,” Gomes said. “Attracting the investment needed to produce vehicles that meet the new CAFE standard may pose a challenge for Canada, because most of our capacity is currently geared towards large vehicles.”
The report states that 35 per cent of Canada’s total assembly capacity is currently dedicated to producing large cars, minivans and pickup trucks; only the Ontario facilities owned by Toyota and Honda are currently producing small, fuel-efficient cars in Canada that meet the new 2020 CAFE targets, but these facilities account for only 20 per cent of Canada’s overall assembly capacity.