[Scotsman]

Monday, March 24, 2008
Mileage at top of car buying list
Survey shows consumers also want tougher regulations on fuel economy.
Scott Burgess / The Detroit News

With the price of a fill-up hovering at record highs, gas mileage has become the number one consideration for American consumers in choosing a new vehicle, even topping which automaker produces the car or truck.

That finding is the result of a AAA survey, which studied consumers' attitudes toward fuel prices. The survey, released this week, also suggests that car shoppers continue to want tougher government regulations on fuel efficiency.

Sixty-one percent of those interviewed said lawmakers should require better fuel efficiency for new cars, trucks and SUVs; 56 percent said the government should increase funding for alternative fuel research.

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"The survey results clearly demonstrate that gas prices have reached levels sufficient for consumers to dramatically alter their driving behaviors and car-buying habits," said Kathy Harrison, vice president and chief public affairs officer for AAA Michigan.

On Friday, regular unleaded gasoline cost $3.27 a gallon, up 22 cents from a month ago and up 70 cents from a year ago, according to AAA. Gasoline in Michigan averaged $3.29 a gallon Friday afternoon.

In the past, high gas prices have ebbed and flowed, and consumers traditionally expected price hikes to be temporary. However, the recent survey by AAA and another by Kelley Blue Book suggest that fuel prices have gotten high enough that they are affecting consumer behavior more.

"I think a lot of analysts were saying we'd hit the tipping point at $4 a gallon," said Jim Rink, an AAA spokesman. "I think this suggests we already have."

A March study of consumer attitudes by Kelley Blue Book stated that 58 percent of car consumers said gas prices have strongly influenced their purchase decision -- up 11 percent since February.

J.D. Power and Associates chief economist Bob Schnobus said that higher gas prices are just one of many factors that weigh on consumers' minds when purchasing a vehicle, but he agreed that it has become more important.

"Consumers have been sort of leery of translating high prices in their decision," he said. "Increasingly, they are recognizing that prices are probably not going to go back."

Last year, as prices climbed, there was not as dramatic impact on vehicle selection, Schnobus said.

"To some degree, I think that surprised all of us. Is $4 the new threshold? What we know is consumers will respond to higher prices," Schnobus said.

One of the ways consumers have responded is by downsizing their purchases. Schnobus called it "a migration" where large SUV owners switch to large crossovers or some to consider a four-cylinder engine instead of a stronger six-cylinder one.

According to Autodata Corp., every subcompact car, traditionally seen as the most efficient, saw an increase in sales during February, compared to February 2007, with total sales increasing 35 percent.

"It's going to keep picking up some momentum as (gas) prices increase," Schnobus said.

http://www.detnews.com/apps/pbcs.dll...803240337/1148