There’s a sense of schizophrenia in automotive marketing these days. In Chevy’s most recent TV ad, smiling GM workers swear that the powerful new Impala “gets an estimated 31 highway miles per gallon,” while in Toyota’s latest commercial there are cars to fit every American’s taste — powerful ones for the power fanatics, and hybrids for the eco-conscious.
Car consumers would be forgiven for feeling a little confused. After all, power has been the best selling point in the U.S. car market for decades. But now, with gas prices above $3 and biting into Americans’ incomes, once-robust sales of gas-guzzling SUVs have stalled, and so auto makers are at pains to stress the fuel efficiency of their latest cars.
“Historically, we’ve always been a reactive industry,” said Maurice Durand, manager of product public relations at Nissan. “If outside forces change consumer demand to more fuel efficient cars, it’s not as if we have all these new cars with greater fuel economy. It’s just that the marketing message has changed to adapt to what the consumer wants.”
Judging what car buyers want has always been a problematic business. From conception to completion, building a new car engine, or a car, can take six or seven years, and so auto manufacturers are often anticipating consumer demand several years out.
Today, car buyers may say they want to save money on gas, but they still want tire-squealing power, analysts say, and car makers appear to be offering them the best of both worlds. While GM and Toyota are touting the fuel economy of their fleet and adding fuel-saving hybrid technology to many of their vehicles, other manufacturers like Mercedes and DaimlerChrysler are pushing the horsepower of their cars, especially brands like Dodge.
“We’re seeing the market head in separate directions, and it’s interesting to see that both are succeeding,” said Mike Chung, auto market analyst at automotive research Web site Edmunds.com. “The conclusion we draw from that is fuel efficiency is not the only driver for sales right now. Fuel economy is definitely in the top five issues, whereas it wasn’t in past, but things like performance and style are still drawing consumers’ interest.”
The question now facing auto manufacturers, said Edmunds.com’s Chung, is whether the recent spike in gas prices will last. And if it does continue, say for another six to nine months, will Americans still crave more power, or will high gas prices push them toward more fuel-efficient cars? This sort of sea change could require auto makers to consider building more fuel-efficient engines into their long-term plans Chung said.
“What the domestics are doing is they are already beginning to pursue this market, and all the companies have a different level of achievement,” Chung said. “GM’s approach has been, rather than build from scratch they have avoided the six-year cycle and purchased the technology from a struggling manufacturer — from Daewoo in this case. And that’s how they were able to bring the Chevrolet Aveo out so quickly — it’s really a re-batched Daewoo.”
Car makers are also beginning to put gas-electric hybrid engines in cars like the Honda Accord, or the Toyota Highlander, said Chung. The fuel efficiency gains in these cars are minimal; Honda, for example, is using the hybrid engine to augment power of its V6, he said. “In the past, a hybrid was a car like the Toyota Prius, or the Honda Insight,” Chung said. “Now we are seeing cars with an electric engine that augments the existing gas engine — it’s one way to feed the desire for power without sacrificing fuel efficiency.”
The way Toyota markets hybrids is a classic case of the battle between horsepower and efficiency notes Bruce Harrison, a senior consultant in the Automotive Group of Global Insight. “They’re saying, ‘The Lexus hybrid accelerates much better,’ and they’re getting across the message that hybrids can be sexy, as well as eco-friendly,” he said.
Americans still thirst for power, according to the latest data.
Thirty-two percent of the light vehicles intended for the U.S. market for the model year had large V8 engines, according to Wardsauto.com, a provider of automotive data. At the same time, Wardsauto.com show the percentage of light vehicles more fuel-efficient four-cylinder engines produced for the U.S. market is lower now than it was in 1985, although one reason for this might be that production of light trucks has increased.
One technology that increases fuel efficiency and is being pursued aggressively by GM, Chrysler and other car makers is cylinder deactivation — a process that turns off cylinders that are not in use. The technology is not new, but recent advances in car computing have smoothed the application, which in its earlier iteration was clunky.
Cylinder deactivation would be a big benefit for certain segments of the vehicle-buying public said Global Insight’s Harrison. Those consumers who use a pick-up truck for work, such as construction for example, might like to save on gas, but also may need all the cylinders their truck’s engine can deliver when they are pulling a heavy load, he said.
“This sort of consumer has no option; they can’t buy a Prius,” he said. “They are looking for technology that maximizes the efficiency of the truck that they purchase. They can’t afford to downsize the torque of an engine, and where I see a solution for this sort of consumer is displacement on demand of V8s — it allows you to operate on six cylinders when not towing and up to 8 cylinders when you need it to pull that trailer.”
Still, some automakers are not yet convinced that consumers want to abandon their big engines.
“When you’re looking from the world of gasoline at $1.20, we projected that we’d start seeing consumers think about fuel efficiency when the price of gasoline hits about $3 and we are convinced the price will stay there,” Reg Modlin, an energy planning director with DaimlerChrysler, recently told CNBC. “We have a bit of that dynamic in the marketplace right now, but we don’t think the customer it convinced yet that it’s going to stay at that level.”