International Newsmaker Q&A: Alan Baum

Jan. 1, 2020
Fuel efficiency is on a fast track, according to industry analyst Alan L. Baum of Baum & Associates in West Bloomfield, Mich.
With automakers the world over embracing engineering developments designed to save energy while maintaining performance and attracting customer acceptance, fuel efficiency is on a fast track for drivers in the New Year, according to industry analyst Alan L. Baum of Baum & Associates in West Bloomfield, Mich., and Luke Tonachel, senior vehicles analyst at the Natural Resources Defense Council (NRDC).

“All signs point to another robust year for America’s most highly fuel-efficient vehicles,” says Baum. “The options for consumers will continue to grow in the New Year with full-year production of many products launched this year and a variety of new products. These products will be a combination of vehicles powered by internal combustion engines powered by gas or diesel, stop/start technologies, hybrids (both mild and full), plug-in hybrids and electric vehicles.”

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Tonachel reports that “2013 is shaping up as another record year on several fronts for highly fuel-efficient vehicles. Across all major automakers, across a variety of technologies, across all major vehicle segments, fuel economy is increasing and will continue to do so in 2013. Consumers are the major beneficiaries, with more choices available to meet their needs.”

With Tonachel’s assistance, Baum recently fielded a series of questions about the latest developments:

Will new sales records be set in 2013 for the most fuel-efficient vehicles?

All signs point to another robust year. The options for consumers will continue to grow in the New Year with full-year production of many products launched this year and a variety of new products. These products will be a combination of vehicles with internal combustion engines powered by gas or diesel, stop/start technologies, hybrids (both mild and full), plug-in hybrids and electric vehicles.

Gas prices have dropped in recent months. Will that be an issue?

Prices have fluctuated over the last few years, but two facts are important to note: The product line of the automakers is based upon the expectation that fuel prices will remain high over time. And consumers appreciate it when gas prices decline, but both surveys and their behavior illustrate that fuel economy remains a major factor in their purchase decisions. This means that fuel economy is now seen as a value on its own terms.

How much higher will fleet-wide fuel economy go?

The process is gradual and long-term, but the continuing increase in availability of more vehicles with a variety of technologies will enable the continuation of the process. In 2011, the average fuel economy level increased by 0.5 miles per gallon, with the increase over 1 mile per gallon in 2012. While we cannot be precise about the level of increase in 2013, we certainly expect a continuation of current trends toward increasing fuel economy, particularly because more and more of the fleet is being improved.

Will automakers remain on track in 2013 in terms of meeting the federal 2016 fuel economy standards?

We see things trending in that direction. The standards require somewhat less than 1 mile per gallon improvement for Model Year 2013 and 2014. Model Year 2014 begins in October 2013.

What will be the major contributors to the improvement in fuel economy in the coming year?

The answer is “all of the above.” A wave of higher mpg midsize vehicles, many launched this year, will be available for the entire year, including the Nissan Altima, Ford Fusion, Honda Accord and Chevy Malibu. The market for higher mpg pickups also offers opportunity, with a new Dodge Ram available now and an improved Chevy Silverado and GMC Sierra coming in the spring.

Will hybrids or electric vehicles be a part of this improvement?

The Accord will soon be offered as both a plug-in hybrid and regular hybrid. The Fusion hybrid is now available and a plug-in version will be offered soon, and we expect the Altima will appear as a hybrid next year. In addition, the volume of the Nissan Leaf will increase in the coming year as production is available from Tennessee.

In fact, at least six new hybrid models will be launched next year and eight plug-in hybrids and electric vehicles will also appear. While many of these initially will be offered in modest volumes, the sales of plug-in hybrid/battery electric vehicles will more than double in the coming year. Hybrid vehicle sales are expected to increase by more than 25 percent.

Will increased demand for hybrid and electric vehicles result in lower prices for consumers?

The launch of domestic production of the Leaf is being accompanied by a new lower-cost model as well as new marketing programs in order to generate demand for the higher volume that will be available. This will no doubt generate responses from other manufacturers. Price clearly matters to consumers, as recent incentives offered on the Chevy Volt have resulted in higher sales volumes.

Is there something going on under the radar that will contribute to improved fuel economy?

Diesel engines are coming to the Chevy Cruze in the spring. Diesels deliver strong levels of fuel economy and Volkswagen, Mercedes and BMW have had great success with these engines.

Stop/start technology is growing across a range of automakers, with the Ford Fusion offering this system at low cost ($295) in order to improve fuel economy.

What is the bottom line?

Across all major automakers, across a variety of technologies, across all major vehicle segments, fuel economy is increasing and will continue to do so in 2013. Consumers are the major beneficiaries, with more choices available to meet their needs.

For more information, visit www.baum-assoc.com and www.nrdc.org.

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About the Author

James Guyette

James E. Guyette is a long-time contributing editor to Aftermarket Business World, ABRN and Motor Age magazines.

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