Recent auto sales figures for the United States suggest that the market is continuing to recover, with strong April sales numbers and early indications are that May will be even hotter, especially for Chrysler. The year’s strong sales are a reflection of improving consumer confidence and strong fleet sales. Early projections for increasing demand in May suggest that demand for light duty trucks is a key factor as well. It’s striking to see the increase in American-made pickups and SUVs. GM’s full-size pickup trucks saw major increases in April even as overall GM sales faltered slightly. Ford reports that F series pickup sales rose by 4% in April. However, U.S. consumers are showing increasing interest in many of the more fuel efficient vehicle models, like the Ford Fusion and the Prius line-up, which appears to be the major driver behind Toyota’s expected sales rebound this year.
But what about fuel efficiency for the light duty trucks and SUVs that are popular with fleets? For fleets that are concerned about hedging their bets on fuel costs, there is increasing interest in some of the alternative fuel options, like hybrids. The question is whether the payback on fuel costs will cover the price premium. My recent report on the Total Cost of Ownership for fleet operators takes a look at some of the options in these vehicle segments and the results are mixed
The comparisons for the SUV vehicle class are limited by the availability of alternative fuel options in the United States. Fewer OEMs produce alternative fuel options in their SUV brands, in part because the size of the SUV seriously limits the benefits of certain types of alternative fuels. For example, hybridization has limited benefits for SUVs and pure electrification at present is not really viable for the SUV class.
The results of the total cost of ownership (TCO) analysis show that moving from a gasoline to a hybrid version of a large SUV does not reduce the TCO, even over 120,000 miles, because of the substantial price premium and relatively small fuel economy improvement of around 23%. The smaller SUV class works better for the hybrid option. While the price premium is still high – a sticker price for a hybrid SUV can be at least 25% more than a comparable gas model, in some cases much more – the fuel economy improvements are much higher, perhaps around 45% or more. The smaller hybrid SUV shows lower TCO at both $4.00 and $5.00/gallon gas prices, suggesting that this option is a good way to hedge against likely fuel price hikes.
Estimated Total Cost of Ownership Comparison for Pickups and SUVs with 120,000 Lifetime Miles, United States and Europe: 2012
(Source: Pike Research)
For the pickup segment, the alternative fuel options again are very limited, and the TCO results are similar to those for the large SUV. For these larger vehicles, it is very difficult to achieve major fuel economy improvements with hybridization. Moreover, diesel options are more common in this vehicle class, making it challenging for hybrids to compete.
There is an opportunity for diesel in the SUV and crossover segments as well, if the diesel price premium is kept to under around $3,500. While hybrids are still likely to be king of the small and mid-size fuel efficient vehicles in the U.S. for the near term, we could see more interest in diesel for fuel economy-conscious customers who are shopping in the SUV and crossover segments.
Tags: Alternative Fuel Vehicles, Clean Transportation, Electric Vehicles, Smart Transportation Practice
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