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New Study Finds Consumers Are Willing to Pay More for Fuel Economy as Auto Regulators Look to Roll Back Efficiency Standards

Wednesday, June 12, 2018

WASHINGTON, D.C. — A new report released today finds that car and truck buyers are willing to pay a premium for improved fuel economy (MPG). The study, commissioned by Consumers Union, the advocacy division of Consumer Reports, found that, on average, consumers reported they would spend over $1,000 more on a vehicle to save $100 per year in fuel costs–or nearly $700 for each additional mile per gallon (MPG). The study also found that consumers value fuel economy significantly more than acceleration and premium features when considering purchasing a vehicle.

The findings come as the National Highway Traffic Safety Administration (NHTSA) and Environmental Protection Agency (EPA) are reportedly set to issue proposed rules that would alter current plans for continued improvement and instead freeze fuel economy and greenhouse gas rules for cars and light trucks after model year 2020. The proposals would also reportedly seek to prevent states from protecting their citizens from harmful air pollution.

“Americans know a good deal when they see one. Not only do car and truck buyers want more fuel economy in their next vehicle, they’re willing to pay more for it,” said David Friedman, Director of Cars and Product Policy for Consumers Union. “This study gives a glimpse into what the market could look like if car-buyers had a broader range of real choices, instead of the limited options automakers provide today. This study should send a message to automakers and regulators that, rather than calling for rollbacks and weaker fuel economy rules, they should invest in fuel efficiency to give consumers what they want.” 

Key findings include:

  • On average, respondents were willing to pay about $690 more for each additional mile per gallon (MPG) – or roughly $5,050 for each gallon saved per 100 miles (gal./100 miles). Similarly, respondents were willing to pay over $1,000 more to save $100/year in fuel costs across experimental conditions
  • Respondents demonstrated a higher willingness-to-pay for improvements to fuel economy of the least efficient vehicles, consistent with the fact that a lot of gas can be saved by boosting the efficiency of SUVs and pickups.
  • Presenting consumers with fuel economy information affects vehicle decision-making, with those respondents who were shown fuel economy information choosing more efficient vehicles.
  • Not all fuel economy metrics are equal: Consumers who saw fuel economy presented as the full EPA-mandated fuel economy label were willing to pay significantly more for fuel economy compared to those who saw fuel economy information presented differently. They were also more likely to select more fuel-efficient vehicles and to rank fuel economy as important.
  • Consumers are much more willing to pay for fuel efficiency improvements than improvements to acceleration or premium features/higher trim levels. (Fuel economy willingness-to-pay was over twice that of acceleration and close to 40 percent more than premium features/trim level)

Shannon Baker-Branstetter, Senior Policy Counsel for Consumers Union, said, “Consumers have made it clear that fuel economy is an important factor when it comes to choosing a vehicle, ranking it above features like acceleration or premium features. And providing consumers with the complete EPA fuel economy label only increases the value that consumers place on saving fuel when choosing a vehicle. By stopping the fuel economy program in its tracks, regulators are choosing to ignore what consumers are asking for and are ultimately costing consumers more at the pump”

The study, conducted by Dr. Christine Kormos at the Simon Fraser University and Dr. Reuven Sussman at the American Council for an Energy-Efficient Economy (ACEEE), integrates the strengths of stated choice experiments, randomized controlled trials, and surveys using a nationally representative sample of 1,883 Americans with a valid driver’s license who plan to purchase or lease a new or used vehicle within the next ten years.

The full report is available here or by visiting www.consumersunion.org/MPGreport. A fact sheet is available here.