Rising Gas Prices Got You Down? Buy a New Car

×
Want to lessen dependence on oil? Buy a new car
Tim Boyle/Bloomberg via Getty ImagesA customer views a Ford Focus vehicle displayed for sale at a dealership in Niles, Ill.
By Allison Linn | @allisondlinn

Rising gas prices got you down? Maybe you should buy a new car.

The average fuel efficiency of American vehicles has risen significantly over the past seven years, thanks to across-the-board improvements on all vehicles and changing vehicle preferences. That's contributing to lower overall gas usage for passenger vehicles, and blunting the blow when gas prices rise.

"The most recent increases are really substantial," said Michael Sivak, a research professor at the University of Michigan.

Sivak said that the average driver of a new vehicle spends about $28 less a month for gas than a new-car buyer just three years ago, based on his analysis of average miles driven, fuel efficiency and gas prices.

Americans who buy a new car are saving money on gas whether they buy a new version of the same car or opt for a more fuel-efficient vehicle, he said.

"There has been an improvement for any given model vehicle," he said.

Experts say it's unlikely that most people are choosing to spend tens of thousands of dollars on a new car just so save tens of dollars on gas each month, although it is a nice perk.

Alexander Edwards, president of the consulting firm Strategic Vision, said his company's research has shown that fuel economy is a consideration when buying a new car, but consumers are more likely to say that reliability, durability, value for the money and even seating comfort are extremely important to their decision-making.

He thinks that in recent years, Americans have started to realize that instead of buying a big SUV, they could spend significantly less on a sedan that also offered the things many SUVs do: Seating for five with room left over for groceries and sports equipment.

"They weren't getting angry one to two times a week when they went to the gas station to fill up," Edwards said. "What was really motivating them ... is that they didn't want to pay $35,000 for an SUV when a $25,000 [vehicle] would fit all their needs."

Then when they got that smaller vehicle, Edwards said, their decision was reinforced every time they went to the gas pump and saw a smaller bill.

Sivak's research has shown that there was virtually no improvement in the overall fuel economy of American passenger vehicles from the mid-1920s to the mid-1970s, and then a pattern of modest improvements began.

The change has been especially dramatic since 2007. Sivak said the average fuel economy of new cars, light trucks and SUVs purchased has gone from 20.1 mpg in October 2007 to 25.6 mpg this past May.

That's based on the window sticker ratings, but Sivak said that even if the number on the sticker doesn't exactly match what a driver gets on the road, the pattern of improvement is still accurate and substantial.

Americans tend to be preoccupied with any slight fluctuation in gas prices. But Edwards, whose clients include many major automakers, doesn't think that carmakers have increased fuel efficiency in recent years because of consumer preferences. Instead, he thinks they have been motivated by tough new government standards.

"It is an artificially created issue," he said. "The [automakers] would much rather focus on performance, styling and capability, because that's what customers are going to base their decisions on."

Still, Sivak notes that the improvements have come as Americans' driving preferences appear to be changing, and not just because of the recent weak economy.

His research has found that the amount of miles each person drives and the amount of fuel each person consumes peaked in 2004, several years before the Great Recession began in late 2007.

"We consuming less fuel because of those two factors: We are driving less per person, but more importantly we are driving more fuel efficient vehicles," he said.

The economy may have played a role in those declines, but Sivak also said there appears to be a shift, especially in Americans under age 40, in how much they drive or want to drive.

"The recession has contributed to the decline, but it has not been the trigger and it has not been the main factor," he said.


US Gas Prices Rise Slightly To $3.71 A Gallon

Increase your money and finance knowledge from home

Economics 101

Intro to economics. But fun.

View Course »

Understanding Credit Scores

Credit scores matter -- learn how to improve your score.

View Course »

Add a Comment

*0 / 3000 Character Maximum

290 Comments

Filter by:
avanticrzy

You can tell that this guy lives in an alernate world..............what kind of SUV can you get for 35K or what sedan for 20K?? 3.90 per gallon for gas whould be cheap here in California...................

June 30 2014 at 1:57 AM Report abuse rate up rate down Reply
Sterling

It's time to bring back the mini truck. I bought my toyota new in 92 and as of this morning it has 291,000 plus miles on it and it still gets 22-24 MPG. I cant begin to tell you how many people have asked me if i want to sell it. I wanted to buy a Ford Ranger and had cash to pay for the whole thing but the sales guy left me standing in the parking lot after I told him "our car had been stolen". The technology is there and we can build cars and trucks better. Detroit just doesn't want to. The wife and I make good money but paying 45,000 for a PU that gets whats listed these days isn't a value at those MPG's. But thats just me. She and I plan our trips out and make loop of the stores we go to. A lot less "on a whim" driving and we use gas apps like Gas buddy to find the cheapest gas and build points for free gas. Cheapest here in 91790- BP Arco 3.93

June 30 2014 at 1:20 AM Report abuse rate up rate down Reply
Anthony

If you are worriedabout gas prices, I have the answer for you. DRIVE LESS , BUY LESS . Buy from the cheapest station. Have the station checked out , you may be getting less gas then the pump shows you. I drive 20,000 miles less a year . No unessesary driving. UP YOUR OIL COMPANIES.

June 29 2014 at 11:59 PM Report abuse rate up rate down Reply
Brian Workman

Gas Prices will never go back to $3.50 a gal. while the Democrats are in control!!!

June 29 2014 at 11:44 PM Report abuse -4 rate up rate down Reply
Brian Workman

When is Obama going to reduce our gas prices by building the Keystone Pipeline!?

June 29 2014 at 11:42 PM Report abuse -4 rate up rate down Reply
3 replies to Brian Workman's comment
Brian Workman

Rising Gas Prices Got You Down? Buy a New Car !?!? Just what the Government wants you to do, to increase the collecting of additional Tax's!!

June 29 2014 at 11:38 PM Report abuse -2 rate up rate down Reply
2 replies to Brian Workman's comment
Frank

Can you explain how using less gasoline will increase gas tax colections?

June 30 2014 at 12:01 AM Report abuse +2 rate up rate down Reply
tony

Not to mention theres a so called black box in every 1 of them, so they can spy on you even better.

June 30 2014 at 12:38 AM Report abuse rate up rate down Reply
vladimir

Get bent ! I lost 25% fuel mileage on all of my vehicles since you went with over priced worthless ethynol. The auto companies could hardly make a vehicle that got 30 mpg with gas, there is no way they are now able to make a vehicle that gets 30 mpg with ethynol.

June 29 2014 at 11:27 PM Report abuse +1 rate up rate down Reply
2 replies to vladimir's comment
Frank

Wrong. I have a 10 year old Toyota Camery that gets over 30 mpg on ethynol based fuel.

June 30 2014 at 12:02 AM Report abuse rate up rate down Reply
1 reply to Frank's comment
tony

Buy American there traitor.

June 30 2014 at 12:39 AM Report abuse rate up rate down
chrisf0047

I have a 2014 Corvette with 460 horsepower that gets around 33 MPG on straight highway driving. The average city/highway mileage is around 27-28 MPG. And this is on pump gas with ethanol (which is pretty much everywhere). There are quite a few cars out there that get 30+ MPG.

June 30 2014 at 1:03 AM Report abuse rate up rate down Reply
PHIL

From what I have seen ,the gas mileage on these new vehicles isn't all that much greater. I average 24 mpg in city and 28 to 30 mpg on highway in my 97 Pontiac 3.8 V-6. Going in debt for a new car that can't do much better mpg wise is kind of stupid, and I don't have outrageous payments every month.

June 29 2014 at 11:24 PM Report abuse +1 rate up rate down Reply
1 reply to PHIL's comment
Frank

What a gas hog you have. My car gets 30 in the city and close to 40 on the highway. It is only a 4 cylinder but has more power then any 6 I have owned. Even some of the 8's. From what I remember of 6's from the 90's and before is that they were dogs. When driving through the hill of Tennesee we had to turn off our air in the car to make it up the hills.

June 30 2014 at 12:10 AM Report abuse +1 rate up rate down Reply
Dorth

WHEN IN THE HELL ARE THEY GOING TO LET US DRILL FOR OUR OWN OIL? WE HAVE ENOUGH TO SUPPLY THE WHOLE USA. WE WOULDN'T HAVE TO IMPORT ANY OIL!

June 29 2014 at 11:05 PM Report abuse rate up rate down Reply
1 reply to Dorth's comment
Frank

WE ALREADY PRODUCE ENOUGH OIL TO SUPPLY THE WHOLE USA. THE PROBLEM IS THE OIL COMPANIES ARE ALLOWED TO EXPORT IT SO THEY CAN MAKE MORE MONEY. THIS IS JUST ANOTHER EXAMPLE OF THE NEED FOR REGULATED CAPITALISM. LIKE WE HAD PRE REAGAN

June 30 2014 at 12:13 AM Report abuse +1 rate up rate down Reply
Dorth

GAS SURE DIDN'T GO DOWN HERE, IT WENT UP TO $3.89! IT REALLY MAKES ME SICK, AS THERE IS NO REASON FOR IT AT ALL!

June 29 2014 at 11:02 PM Report abuse +1 rate up rate down Reply