The Car and Truck Fleet and Leasing Management Magazine

Study: Only 11% of Consumers Willing to Pay Extra for 'Green' Cars

March 14, 2008

WESTLAKE VILLAGE, Calif. --- Although many new-vehicle buyers may want to purchase an environmentally friendly vehicle, only 11 percent are "very willing" to pay more to do so, according to the J.D. Power and Associates 2008 Power Auto Offline Media Report--Spring Edition.

The study finds that, in particular, new-vehicle buyers who express a strong willingness to pay more for environmentally friendly vehicles are more likely to be female and are highly educated. The concentration of consumers who express willingness to pay extra for an environmentally friendly vehicle is highest in the western United States and lowest in the Midwest. According to the study, among these environmentally conscious consumers, approximately one in 10 actually purchased a new hybrid vehicle.

"The marketing buzz in the automotive industry is all about green cars and trucks," said Jon Osborn, research director at J.D. Power andAssociates. "While most consumers immediately think of hybrids when considering an environmentally friendly vehicle, the price premium of hybrids may be prohibitive. However, consumers don't have to buy a hybrid vehicle to be environmentally friendly. One can still be environmentally conscious by buying a more fuel-efficient vehicle that gets good gas mileage."

The study also finds that new-vehicle buyers who say they are very willing to pay more for a vehicle that is environmentally friendly are more likely to purchase compact vehicles than the average new-vehicle buyer. In addition, these environmentally conscious new-vehicle buyers also tend to have owned smaller vehicles previously, demonstrating a propensity to consistently choose more fuel-efficient vehicle models.

"Despite heavy media attention on hybrid vehicles and the emergence of a greener auto industry, the hybrid market is still in its infancy, and currently comprises only about 2.2 percent of the new-vehicle market," said Osborn. "However, this segment will continue to grow as more hybrid models are offered in the marketplace, particularly since gasoline prices are likely to increase and more stringent gas mileage standards are expected to be imposed on automakers."

The study finds that owners who purchase hybrid vehicles tend to have attained much higher levels of education, report much higher household income and are about four years older than the average new-vehicle buyer (54 vs. 50 years of age). Hybrid owners tend to be proud advocates of their vehicles, and typically provide many more positive recommendations about their ownership experience than do other new-vehicle buyers.

In addition, hybrid buyers and potential hybrid buyers tend to read magazines such as The New Yorker, Sunset, and Wired, and are likely to watch cable television channels such as CNN and CNN Headline News.

The 2008 Power Auto Offline Media Report - Spring Edition is based on responses from 44,931 principal drivers of new cars and trucks. The study measures media viewing and readership habits of new-vehicle buyers, focusing primarily on magazine readership and also including television viewing, radio listening, Internet usage and newspaper readership. The study also examines consumer opinions and attitudes regarding vehicle ownership.

Headquartered in Westlake Village, Calif., J.D. Power and Associates is a global marketing information services firm operating in key business sectors including market research, forecasting, performance improvement, training and customer satisfaction.

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