KBB: Consumer Reaction to Rising Gas Prices Varies Greatly

Consumer reaction to gas prices is sending mixed signals to Kelley Blue Book.
According to the latest Kelley Blue Book Market Intelligence survey, more than half — in fact, 66 percent — of new-vehicle shoppers have either changed their minds about which vehicle they are considering, or are thinking about vehicles they normally would not have considered, due to rising gas prices.
However, KBB’s Hot Car Report showed only one sedan along with four crossovers and SUVs generated the most shopping activity growth last week.
“The rollercoaster of gas prices has taken its toll on new-car shoppers,” acknowledged Jack Nerad, executive editorial director and executive market analyst for Kelley Blue Book.
“The reality of today’s economy means that many shoppers are factoring in fuel efficiency and gas prices toward the top of things they consider when choosing their next new car,” Nerad continued in reference to the survey results stemming from research conducted throughout the first quarter.
“Lucky for them, each year auto manufacturers work increasingly hard to improve fuel economy in their new models, with many gasoline-powered vehicles now achieving 40 mpg or higher, while a handful of alternative-energy vehicles achieve upwards of 100 mpg-equivalent,” he went on to say.
Despite what Nerad highlighted, the top five models stirring the most shopper activity gains last week at Kbb.com do not get 40 miles per gallon. That group includes Kia Sorento (up 22.0 percent), Chrysler 300 (up 21.2 percent), Ford Escape (up 14.0 percent), Honda Pilot (up 12.9 percent) and Toyota Highlander (up 11.7 percent).
“Four out of five vehicles in the top gainers list are SUVs and crossovers,” KBB reiterated. “Coincidentally, gas prices have started to decline within the past week.
“The vehicle gaining the largest growth in popularity is the Kia Sorento. As pump price anxiety eases and coupled with an effective ad campaign, Kia is expanding its shopper consideration with the Sorento,” the site added.
Reinforcing how quickly gas-price trends can sway shopper behavior, the models posting the greatest declines in site activity last week predominantly were fuel-efficient.
In fact, three of the top five biggest decliners were either hybrids or electric vehicles, including Toyota’s Prius V (down 15.1 percent) and Prius C (18.3 percent) as well as the Chevrolet Volt (down 20.2 percent).
Before the most recent Hot Car Report, KBB received plenty of consumer reaction about how much rising fuel costs would sway what units might turn best on dealer lots.
The site’s survey revealed consumer expectations about gas prices worsened quarter-over-quarter by 30 percent.
In the first quarter of this year, 76 percent of new-vehicle shoppers said they expect gas prices to get higher in the next 30 days compared with the fourth quarter of last year when only 46 percent of new-car shoppers believed fuel costs would climb during the next 30 days.
KBB’s consumer sentiment survey also revealed that new-vehicle shoppers have an average of 85,328 miles on their current vehicle, which is eight model years old (on average).
Analysts found the most common reason for looking to purchase a new vehicle is that the consumer’s current vehicle has high mileage (30 percent), followed by a desire for better fuel economy (19 percent).
Half of those surveyed said they plan to trade-in their current vehicle at the dealership, and 23 percent said they plan to sell their vehicle to another person.
The most commonly reported problem faced by consumers visiting dealerships is a small selection of vehicles, with 24 percent citing difficulty in finding the specific vehicle they want.
Half of new-vehicle intenders already have visited a dealership as part of their shopping process for their next vehicle purchase or lease.
When it comes to what consumers are looking for in their new-vehicle purchase, KBB found shoppers cited warranty as the most important feature, with three-years and 36,000 miles being the most popular choice for the minimum warranty a vehicle must have in order for them to consider purchasing the vehicle.
The second most important feature for new-vehicle shoppers is fuel efficiency, followed by power windows/door locks.
This KBB Market Intelligence survey on consumer sentiment was fielded to 355 in-market shoppers on Kbb.com during the first quarter.