Oil price swoon pushes Canadians to embrace gas guzzlers

Car buyers are fickle creatures, as changeable as the price of gasoline. And as the price of gas has dropped over the past several months, thousands of Canadians have thought to themselves: it's time to buy a truck.

According to sales number compiled by Desrosiers Automotive Consultants, Canadians are buying more of the least fuel efficient cars and trucks: pickup trucks, SUVs, even small and large vans.

We talk about all roads leading to electric in the auto sector, it's just that the road is very, very long.- Dennis Desrosiers, Desrosiers Automotive Consultants

There has been anearly 40 per centincrease in the sales of small pickups, a ten percent increase in large pickups. and a 24 per cent increase in the sales of large SUVsin the first three month of 2015 as compared to 2014.

Over the same period, sales of entry level, more fuel efficientvehicles were down nearly 7 percent.

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"Essentially most Canadians aspire to a bigger, fancier, more powerful, more luxurious vehicle," said Desrosiers.

"When gas prices are high, they make a compromise and they buy less vehicle than what they desire, but when gas prices are low they say why should I compromise?"

Hybrids and electric vehicles

A study in the US released on Earth Day showed that record numbers of hybrid and electric car owners were trading in their vehicles for SUVs. That report prompted howls of outrage from electric vehicle proponents, who say sales of traditionalhybrids such as the ToyotaPriusdo tend to fluctuate with gasoline prices, but electric vehiclesdo not.

Is that the case this time around?

Here are some recent Canadian numbers. Sales of electric vehicles jumped in leaps and bounds over the past two years. Nearly halfof all electric vehicles in Canada were sold in 2014.

But that has slowed.

These numbers are not complete, since Tesla doesn't report monthly, but do represent two of the most popular models.

Sales ofthe ChevroletVolt, the most popular electric vehicle in Canada, were down 30 per cent, in the first three months of the year. Sales of the Nissan Leaf (the second most popular) were off 17 per cent.The Mitsubishi IMIEVsales were down by a half, although we are talking about a very small number.

Matt Stevens is the CEO of a company called FleetCarma, which does research on EVs and also advises companies on making their vehicle fleets more efficient.

Matt owns a Chevy Volt himself and says that gasoline prices are probably playing a small role in sales number, but there are other factors at play. For example, the Chevy Volt is going through a redesign and consumers are waiting for more models to hit the market.

"There's evena minivan coming to market next year," said Stevens. "Really any kind of vehicle you want, there's going to be a plug-in option. Gas prices matter, but at the end of the day, the availability of these cars is being legislated in a number of markets. If you want to make fuel efficiencystandardsor zero emission targets these vehicles have to be there."

Why are car buyers so fickle?

The trend of auto buyers buying gaz guzzlers when gasoline prices are low is well established, but doesn't necessarily make economic sense.

Duncan Stewart has been puzzling over the phenomenon for a number years, as a research chair for Deloitte. Even when gasoline prices are high, say $1.50 per litre, he says the cost difference of running a hybrid versus a fully gas powered vehicle is relatively small.

"Most people don't drive that far," said Stewart. "The bigger cost on cars tends to be the depreciation or the maintenance, so from an economically rational perspective, the change in the price of gas shouldn't be that big a factor in the kind of car you buy."

Gas powered vehicles are getting more efficient

Meanwhile the auto makers are doing their best to make all their vehicles fuel efficient. Take the Ford F-series truck, the most popular in Canada. The 2015 version of the F-150 has an aluminum body, making it 700 pounds lighter and improving fuel efficiency by between five and 20 per cent. It still gets less than 20 miles per gallon, as compared to the 50 mpg the Prius enjoys and the 124 mpg equivalent that the Nissan Leaf pulls off.

Dennis Desrosiers says that the automakers are being forced to improve.

"The vehicle companies are being regulated into much higher fuel efficiency," said Desrosiers. "What they're doing is enlisting hundreds of small technologies to try to take every vehicle in their fleet and make it more fuel efficient, rather than try to shift consumers into one segment or the other."

"We talk about all roads leading to electric in the auto sector, it's just that the road is very, very long."