Editor’s Note: FMN Will be working to support the efforts of the Fuels Institute. The Fuels Institute is a research-oriented think tank founded and managed by NACS, dedicated to evaluating the market issues related to consumer vehicles and the fuels that power them. We will regularly run materials developed by the institute, as appropriate, for the education of our readers. This piece previously ran in the February 2014 issue of NACS Magazine.
By John Eichberger
The vehicle market continued to recover last year, posting a 7% increase in total light duty vehicle sales according to WardsAuto. This growth was reflected in every fuels category as all vehicle types posted increases in units sold. But taking a look into the future, change is afoot. Government forecasts indicate that the composition of the market may evolve, with alternatives taking market share away from gasoline-powered vehicles.
Released in January, WardsAuto data showed that the overall market for automobiles and light trucks expanded 7% to 15,597,335 vehicles sold. Within this market, gasoline-powered vehicles remained dominant with 93% of the market, but market share declined approximately 0.5% compared to 2012 sales. (Flexible fuel vehicles are not segmented in this report. The author assumes they are included in the quantities reported for gasoline vehicles.)
Among the vehicles comprising the remaining 7% of the market, diesel and hybrid vehicles com¬bined for more than 6% of total light duty vehicle sales. Diesel vehicles enjoyed a 10.6% increase in overall sales while hybrid sales grew 13.3%. Posting the strongest year over year sales gains were battery electric vehicles (BEV), increasing units sold by 241.4%. This strong growth propelled BEVs to 0.3% of the new vehicle sales market.
But Wait, There’s More
In addition to the WardsAuto report on actual sales over the past two years, the U.S. Energy Information Administration (EIA) released its Annual Energy Outlook 2014, which includes projections for vehicles and fuels through 2040. While the total vehicles sold reported by the two sources varies by 4.5% in 2012 and 7.4% in 2013 (EIA’s report was released on December 16, 2013), we can learn a lot from the EIA forecast on the market share contribution of each fuel type.
EIA projects total vehicle sales will increase nearly 24% by 2040 and the composition of these sales will change only modestly. The most remarkable projection is a 5% drop in gasoline vehicle share of new sales by 2040 — in spite of a 17% increase in units sold. Helping to fill the market gap left by gasoline will be an increase in market share for diesel vehicles and hybrids, expected to increase share by 3% and 2%, respectively. This growth will be achieved by increases in units sold — 261% for diesel vehicles and 111% for hybrids. BEVs and plug-in vehicles are also projected to increase market share significantly over the forecast period and post sales increases of 480% and 345%, respectively.
The growth in the sale of vehicle alternatives to gasoline, although limited, is noteworthy. The vehicle fleet takes approximately 20 years to turn over, so any change in market dynamics will take significant time. EIA’s projections through 2040 show erosion in the market dominance of gaso¬line vehicles, which could accelerate if alternatives continue to gain attention with consumers as they have in the past several years.
The Fuels Institute is monitoring closely the changes in the market and is working on projects that will provide additional insight into the changing preferences of the consumer. We are focused on better understanding how the market operates, what opportunities and challenges are presented and how the fuels and vehicles markets will develop. Third-party resources like WardsAuto and EIA are good places to start and the Fuels Institute will produce additional valuable resources in the coming years.
For more information about the Fuels Institute or how you can get involved, contact John Eichberger, executive director, at [email protected] or (703) 518-7971.
