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Rising Unemployment and Fuel Prices Shift Market

The broad claim that Americans aren't interested in fuel economy has been dealt another blow in latest study.

by on Jul.06, 2009

Driven by rising fuel prices and a weak economy, the average new American vehicle's fuel economy has risen 5% since 2007, according to a new study.

Driven by rising fuel prices and a weak economy, the average new American vehicle's fuel economy has risen 5% since 2007, according to a new study.

A new University of Michigan study from its Transportation Research Institute says that since 2007 the average fuel economy of new vehicles purchased in the U.S. has increased by more than 5%. The combination of rising unemployment and rising fuel prices have contributed to the shift.

The average fuel economy of purchased new light-duty vehicles — cars, pickup trucks, minivans and SUVs — improved from 20.2 miles per gallon in October 2007 to 21.3 mpg in April 2008. Fuel economy peaked in May 2008 at 21.7 mpg, amid a surge in the sales of small cars. Since then the improvement has fallen back as gasoline prices have dropped.

The report by UMTRI’s Michael Sivak and Brandon Schoettle of the Transportation Research Institute found that unemployment and the price of gasoline together account for 53% of the variance in the average fuel economy of new cars purchased.

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“In early 2008, when the unemployment rate was relatively low, the increased price of gasoline led to an increase in the purchases of relatively expensive vehicles that were fuel efficient,” said Sivak, research professor and head of UMTRI’s Human Factors Division. “This ended when gasoline prices declined in late 2008.”

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