Another Decline: US New Car MPG (January 2016)

US automobile fuel efficiency declined for the fifth time since May, according to a report issued by the University of Michigan’s Transportation Research Institute (UMTRI).

New car fuel efficiency peaked in August 2014 at 25.8 miles per gallon, and has since fallen to 24.9 mpg for December 2015.

During the period of high oil prices, US vehicle mileage was improving as much as 6% per year, and averaging 3-4%.  With the collapse of oil prices last summer, the US consumer now prefers larger cars with more powerful engines, resulting in explicit fuel economy declines.  Mileage is declining at the pace of 0.8% per year. 

We anticipate fuel economy to continue to decline at the pace of about 0.1 mpg per quarter.  Had oil prices remained elevated, new cars would likely have seen a 4% sales-weighted efficiency gain over the last eighteen months.