Bigger vehicle trend doesn’t bode well for fuel efficiency targets
Canadians continued to snap up record numbers of SUVs and pickup trucks in July, a trend that will make it very difficult for automakers to meet new fuel-efficiency standards outlined by the government last week.
Auto sales hit another all-time monthly high in July, inching up 0.4 per cent to 177,844 units. But the growth was concentrated in light trucks — a category that includes sport utility vehicles, crossovers and pickups — which gained 8.2 per cent while car sales declined 10.3 per cent, according to data compiled by DesRosiers Automotive Consultants.
FCA Canada Inc. epitomized the trend, with Jeep sales soaring 21 per cent and Ram pickup sales jumping 17 per cent while car sales plunged 46 per cent.
If low gas prices continue to spur consumer demand for light trucks at the expense of more fuel-efficient cars, it will be virtually impossible for manufacturers to meet new fuel-economy regulations that aim to cut fleet-wide fuel consumption in half by 2025 from 2008 levels.
“It’s been shocking the rate at which buyers have migrated to trucks in place of cars,” said Tony Faria, co-director of the University of Windsor’s Office of Automotive and Vehicle Research.
“At the rate at which we’re moving at this point, there’s no way the standards for 2025 are going to be met.”
The regulations, announced last week, aim to harmonize Canada’s fuel-economy standards with the U.S., where automakers have been told to increase fleet-wide fuel economy to 54.5 miles per gallon — approximately 4.3 litres per 100 kilometres — by 2025.
In July, the average fuel economy of new vehicles sold in the U.S. was 25.4 miles per gallon, according to the University of Michigan’s Transportation Research Institute.
The trend toward larger vehicles is hammering sales of hybrid and electric vehicles particularly hard. In the U.S., sales of those vehicles fell 22 per cent in the first six months of the year, according to industry site Edmunds.com.
“There’s been a complete reversal in the market where hybrids are barely holding their own,” said Phil Edmonston, founder of the Automobile Protection Association and author of the Lemon-Aid guides to new and used vehicles.
“We’re probably going to have some stiffer, more effective and more enforceable regulations in order to keep this buying attitude from changing too much.”
Edmonston and Faria said Ottawa will have to consider raising gasoline taxes if it really wants to encourage fuel efficiency, but both doubt there’s the political will to do that.
The U.S. Environmental Protection Agency will review the fueleconomy standards in 2017 and will probably consider revising them downward at that point, Faria said. If that happens, Canada will almost certainly follow suit.
“I would bet almost anything on it unless we have a major, major breakthrough in technology,” he said.