Behind the Numbers Fuel-Economy Economics

Canada
April 2015
Fuel-Economy Economics
So, what impact does fuel economy really have in terms of
satisfaction and repurchase intent among Canadian
vehicle owners? To find out, J.D. Power recently authored
the Canadian Fuel Economy Impact Report, to dig deeper
into this critical marketing question. Suffice to say that
while Canadians are largely reliant on the debatable and
poorly understood L/100km metric, vehicle owners
approach fuel economy from a different, more
experiential angle, which is good news for marketers.
THE EFFECT OF PERCEIVED FUEL ECONOMY ON
REPURCHASE INTENT
% Definitely Will Purchase/Lease Same
Make of Vehicle
Jd.ney@jdpa.com
416-507-3254
In 2014, the national average retail price of regular fuel
hit an all-time high at $1.28 per litre –an increase of 35%
from 2009.* Despite the increase in the cost of fuel,
Canadians are buying more CUVs and SUVs evidenced by
a 2014 year-end product mix of 58% light trucks and
42% passenger cars, up from 52%/48% in 2009.**
60%
50%
40%
30%
20%
10%
0%
0
1
2
3
4
5
6
7
8
9 10
Vehicle's fuel economy rating (10-point scale)
Source: J.D. Power 2014 Canadian Fuel Economy Impact Report
*Statistics Canada
** Power Information Network (PIN)
Behind the Numbers
 The relative impact of an owner’s fuel economy
experience is highly dependent on a number of
variables, including vehicle segment, and stated
reasons for brand purchase. However, brands can
create halos by highlighting fuel-efficient technology.
For example, while only 17% of European vehicles sold
in Canada in 2014 were diesel-powered, the perception
of their fuel economy has boosted fuel economy
satisfaction among those owners (regardless of fueltype) significantly higher (7.7 out of 10) than those
owning Asian (7.2 out of 10) and North American (6.9
out of 10) nameplates.
 Some owners are more sensitive to the fuel economy of
their vehicle. Among owners who cite fuel economy as
their primary reason for purchase, and who also
reported a problem with excessive fuel consumption,
fuel economy satisfaction scores drop by 2.3 times,
(from 8 out of 10, to 3.5 out of 10) compared with
those who reported no such problems. However,
among owners who did not consider fuel economy to
be their primary purchase driver, the impact of an
excessive fuel consumption problem was significant,
but more muted, dropping fuel economy satisfaction by
a factor of 1.7 times (7.3 out of 10 to 4.4 out of 10)
 In examining brand repurchase intent, the influence of
fuel economy is diminished. Owners expect great fuel
economy, and only if they view their performance as
outstanding (10 out of 10) does fuel economy become
a loyalty factor. Fully 57% of those owners say they
“definitely will” repurchase, nearly doubling between
scores of 8 and 10. Generate middling to poor
satisfaction here though, and the impact is negligible,
with repurchase intent rising from 13% at 4 out of 10
to only 17% at 7 out of 10. Clearly, fuel economy is an
expectation rather than a differentiator.
 Across segments, this impact is highly variable. Among
owners in the sub-compact segment, for example,
overall vehicle ownership satisfaction decreases by
144 points out of 1,000 when owners report a problem
with excessive fuel consumption compared with only
79 points in the compact segment.
 Fuel economy satisfaction is more perception than
simply a L/100km statistic. The good news for OEs is
that focused marketing tactics such as showcasing a
halo product or a consistent fuel efficient message, can
affect how consumers feel about their own experience.
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© 2015 J.D. Power and Associates, McGraw Hill Financial. All Rights Reserved.