Fuel Prices and Consumer Preferences for Vehicles

The purpose of this paper is to examine the relationship between fuel prices and consumer preferences for passenger motor vehicles in the U.S. automobile market. The paper examines the stated preferences of new vehicle owners from December 2001 to January 2008 to explore possible indications of changes in consumer preferences. Annual survey data were used. During the observation period, gasoline prices fluctuated significantly and rose to more than twice their lowest level. The importance of acquiring a vehicle with good fuel economy was analyzed, and the results of the statistical analysis are presented. The paper presents additional evidence that more consumers would state that fuel economy becomes a more important factor in their purchasing decisions as gasoline prices rise. The evidence also supports the suggestion that the financial impact of fuel economy will matter first to lower-income buyers as gasoline prices rise.