Just because the industry is making green vehicles does not mean customers will buy the products.
A green-technology vehicle can fall short of being enough. "Although at times we may believe it's all about fuel economy and the environment, issues of safety and security come first followed by freedom and esteem," Alexander Edwards, President of Automotive for Strategic Vision, told World Congress attendees during Tuesday morning's 'Does Green Matter in a Try-To-Survive Market' session in the SAE Executive Business Theater.
"When deciding between the purchase of a $25,000 sedan or a $35,000 SUV in today's financial uncertainty, customers are taking fewer risks and making choices that strengthen their sense of security," Edwards added. "Most people don't want to compromise their priorities for slightly better fuel mpg."
Not all vehicle buyers shop specifically for green vehicles. Yet automakers that have green vehicles in the product portfolio can reap from the relevance. "Green can bring awareness to a brand, so it does generate interest," said Edwards.
Scott Miller, CEO of Synovate Motoresearch, agrees that emotional influencers—such as being socially responsible about emissions and the consumption of natural resources—are "more likely to drive someone to your brand." In illustrating his point, Miller said BP was the only corporation among energy companies that survey respondents viewed as a leader in social responsibility.
"A growing number of consumers will refuse to do business with a company that is not acting in socially responsible ways," Miller said. In the last six to seven months there has been a shift in consumers' perceptions about advanced technologies like hybrid-electric vehicles, flexible fuel vehicles, and fuel-cell vehicles, Miller noted. Although people are aware of the positive environmental impacts of advanced powertrain technologies, customers view the internal combustion engine as having a higher reliability, Miller said.
Sales of light passenger vehicles in the U.S. for 2008 were 13.2 million with 315,688 of that total representing hybrid vehicles from Toyota, Honda, Ford, General Motors, and Nissan, according to industry data. The 2009 vehicle sales forecast is downward, according to Paul Taylor, Chief Economist for the National Automobile Dealers Association (NADA). "The industry has declined to 10 to 12 million units and that could last through 2010," said Taylor.
The number of green vehicles sold in the U.S. in 2009 and beyond may be influenced by perceptions. According to Miller, buyers tend to see green vehicles as having a high cost up-front, an unknown resale price, and an unknown maintenance price—among several other negative associations. And when consumers hear that next-generation advanced green technologies are "just around the corner," that can hurt sales, Miller said, adding: "You're basically telling customers to just wait on the sidelines."
The way to inspire positive impressions about green vehicles is to make the up-front cost of a vehicle 'reasonable,' guarantee the resale value, and offer a maintenance contract, according to Miller.