By Adrienne Roberts
The average fuel economy of light vehicles sold continued to level off in 2016 compared with gains made in prior years as Americans continue to opt for heavier vehicles, a trend likely to stoke the auto industry's concern buyers won't want more fuel-efficient vehicles being mandated by the government.
Analysts say the cars and trucks being bought in the U.S. were becoming notably more efficient every year until gas prices started falling in the second half of 2014. The typical vehicle sold last year achieved about 25 miles per gallon, according to two organizations that chart fuel economy by crunching window-sticker data, as sales of lighttrucks -- including crossover wagons -- hit a record 60% of industry volume.
Stagnant fuel-economy data come as President-elect Donald Trump's administration appears open to revisiting strict fuel economy standards put in place by the Obama administration through 2025. While trucks and cars are treated differently under these standards, many industry players have said the regulations are too stringent and out of step with consumer tastes.
Executives say low gasoline prices, averaging $2.14 per gallon in 2016, spark demand for pickups, crossovers and SUVs. That represents the lowest price at the pump since 2004, according to the U.S. Energy Information Administration.
Sales of heftier vehicles typically boost profits for auto makers, but could lead to a headache when it comes to meeting emissions standards. Last week, the Environmental Protection Agency issued a decision to hold firm to fuel-economy standards requiring auto makers to sell light vehicles averaging 54.5 miles per gallon by 2025.
If buyers don't start opting for far more efficient vehicles, such as compact sedans, auto makers will likely be forced to employ techniques to make their products lighter or spew less emissions. Electric vehicles and costly materials -- such as aluminum or magnesium -- could help.
The average window-sticker mile per gallon rating of light vehicles sold in the U.S. last year was 25.4 miles per gallon, a 0.6% improvement compared with 2015, according to WardsAuto.com -- which measures fuel economy on a calendar-year basis. The data and information provider said 2015 also showed only a modest uptick, breaking a streak of at least six years during which fuel-economy performance grew an average 2.5% annually.
Last year's performance represented the smallest year-to-year gain in the nine-year history of the index, according to WardsAuto.com.
The University of Michigan's Transportation Research Institute also estimates fuel economy for the 2016 model year equaled slightly better than 25.1% mpg, but says that number has been unchanged since the 2014 model year, during which truck and SUV sales began to surge. Gas mileage in the 2010 model year, by comparison, was 22.1 mpg, the UMTRI said.
Auto makers sold more than 50 million vehicles over the past three years, more than half of which are classified as light trucks by the EPA. Small crossover wagons, such as compact SUVs based on passenger-car architectures, can qualify for this label.
Ludwig Willisch, BMW AG's top sales executive in North America, said during an interview last week buyers want to ride higher and have more cargo room. "It's not the fact that you can go off road with (crossovers and sport-utility vehicles), it's really more about the space you have in the car and the driving position."
"As gas prices have come down andinterest rates have come down, the access to credit was very cheap," José Muñoz, Nissan Motor Co.'s chairman in North America, said in an interview at the Detroit Auto Show. "The consumer in the U.S. naturally likes bigger cars, bigger engines and they've been able to have very low level of payments...despite having very large (vehicles)."
Write to Adrienne Roberts at email@example.com
(END) Dow Jones Newswires
January 18, 2017 15:45 ET (20:45 GMT)
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