Nearly half (47%) of US car owners are willing to buy a more fuel efficient car should gas prices increase $1, but a strong majority rule out using alternative transportation to offset rising gas prices and are more likely to cut discretionary spending, according to a survey by Discover Financial Services. Discover Financial Services is a business unit of Morgan Stanley, and operates the Discover Card with more than 50 million cardmembers.
The Discover Survey reported that half (50%) of car owners are driving vehicles that get less than 20 miles per gallon.
Nearly 60% of consumers are paying more than $100 a month for gas. As gas prices rise, our survey shows discretionary spending and even living expenses will most likely be reduced. But a dollar increase in gas prices may have a positive impact on the environment as almost half of the car owners surveyed said they would be somewhat or very likely to buy a more fuel efficient car.—Ed Stolbof, Senior Vice President of Marketing for Discover Financial Services
Although 75% of car owners said they were likely to drive less if gas prices increased $1, there seems to be little support for alternative transportation.
The Discover Survey reported:
61% were not very or at all likely to walk or ride a bicycle;
Less than one in four (24%) were somewhat or very likely to take public transportation;
45% of consumers were somewhat or very likely to carpool;
59% of women said they would be ‘very likely’ to drive less compared to just 41% of men; and
Nearly one-third (29%) of women also were more likely to use carpools versus 21% for men.
The results of the new survey conducted as part of the Discover Spending Confidence Monitor indicate that 80% of Americans find their car very important in their everyday lives. This may explain why car owners are ready to sacrifice non-essential items in their lives rather than their cars if gas prices increase $1, Discover suggests.
According to the survey, if gas prices increase $1.00:
70% of car owners said they will cut back on entertainment spending;
66% said they will change their vacation plan;
64% said they will postpone a major purchase; and
52% said they were somewhat or very likely to cut back on grocery spending.
It appears the first line of defense to lessen the impact of rising gas prices is expense management. Consumers are likely to cut back discretionary spending, but rising gas prices may force some to go a step further by cutting into living expenses as well.—Ed Stolbof