Is it too early to declare the auto recession over?

By Jim Hossack, AutoPacific

(May 2010) TUSTIN, Calif. — AutoPacific, an authoritative automotive research and insight company, regularly tracks the impact of fuel prices on the type of vehicles Americans will consider buying. The results for the just completed Fuel Price Impact Survey show some surprising results, and are summarized below.


While there are many indications that the recession is ending, at least in terms of new vehicle sales it may be too early to declare victory, as expressed intent to purchase a new car or truck in the next two years has slightly declined over the January to March period.


Over 1,000 respondents completed AutoPacific’s March, 2010 wave of its Fuel Price Impact Survey.


New Vehicle Purchase Intention not Strengthening: In the September, 2009 wave of the research, 23% of the respondents indicated they were definitely or probably likely to acquire a new vehicle in the next 24 months. In the latest March 2010 wave, only 20% indicated they will likely purchase in the next 24 months. The industry may not be out of the woods yet as demand does not appear to be strengthening.


Fuel Prices Continue to Increase at a Moderate Pace: The median fuel price paid in March, 2010 was $2.82 per gallon, up 13 cents from January, 2010 but up 86 cents per gallon from March, 2009. You would think this would cause interest in small cars and hybrid vehicles to spike, but this is not the case.


Interest in Small Cars and Hybrids Has Declined over the Last Year: When asked what kind of vehicle respondents would select if they were to replace their primary vehicle today, 22% selected a Small Car in March 2009, but by January, 2010 Small Car consideration had fallen to 12% and continued at that level in March 2010. During this time period, the price of fuel went up by 44% but the interest in Small Cars went down by 44%. Perhaps Americans have become accustomed to higher gasoline prices, or maybe the consumer is just more confident in the economy.


The story with respect to hybrids is also dramatic. Despite an 86 cent per gallon increase in the price of fuel, hybrid intention is down from 22% in March, 2009 to 11% in January, 2010 and down to 9% in March, 2010. Will that trend continue, or are new generation hybrids about to stage a resurgence?


SUVs (including car based Crossover SUVs) Regain Popularity: Sport Utility Vehicles replacement intention has increased from 16% a year ago, to 27% in March, 2010, an increase of 68%. Essentially, older, conventional body-frame truck-based SUVs are being replaced by car-based, unitized crossover SUVs.


Pickup truck intention follows a similar, but less dramatic pattern: 12% a year ago, and 14% this March for a 17% increase. There is, however, only a slight increase in the mix of compact pickups to full-size units. Perhaps it is time for the return of the traditional small, fuel efficient, low price small pickup.