Do People Really Care About Fuel Economy?

Forbes interviewed Mike J. Jackson, chief executive of AutoNation, the country's largest public dealer network, with 322 stores in 16 states and he had some interesting things to say about hybrid cars and fuel economy in general.

Do people really care about fuel economy?

They do care. They just don't want to pay for it, and they don't want to give up anything they have--horsepower, speed and size. When they come in for the moment of truth to write the check, fuel efficiency is not winning. Look: Gas is $3, everyone's talking about hybrids, there's a huge social responsibility discussion going on. And yet overall fuel economy improved by just half a mile per gallon on vehicles sold in the last 12 months.

Do you know hard it is to move an average when you're talking about millions of cars being sold? Moving 1/2 mile per gallon in one year is actually very impressive.

So what would it take to get consumers to consume less fuel?

The only way to do it is to increase the price of gasoline--give them an economic incentive to buy a more fuel-efficient vehicle. Sixty percent of consumers [consider] hybrids. Two percent buy one. What happened? They literally take the back of an envelope and say, "A hybrid costs X, gas costs X, it'll take ten years to get my money back. Show me something else."

Unfortunately, that's the consideration you get for a lot of hybrid cars. But that's not because of the fuel economy question, that's a matter of how much improvement you get for the extra money.

When you pay for a Prius, for instance, you see a huge improvement in your fuel economy. When you look at a lot of the other hybrid cars, you don't get a huge improvement, and it becomes a lot harder to justify the cost. Which is why I was so disappointed to see the "improvements" made for the 2009 Ford Escape Hybrid. If they had emphasized the fuel economy, not the power improvements, they could move a lot more hybrid Escapes.

You're talking about a gas tax?

We would need $6 gas today for the consumer to have the psyche that existed in 1980. We're going to add $5,000 to $7,000 per vehicle to meet these new regulatory fuel economy standards. Will the consumer pay for it? If gasoline is cheap, they'll just buy a used car for less money.

I'm not really in favor of a gas tax to move people off of gas. I've seen studies saying that $3.00 (or $3.50) a gallon is a tipping point for gas prices start to really affect hybrid car sales. It's no surprise that gas prices and hybrid car sales are highly correlated. Since we're already seeing those prices regularly, I'm guessing it's not going to take $6 or $7 a gallon to get people moving.