More Good News for Vehicle Fuel Efficiency

Yesterday I reported on a survey by KPMG suggesting that the automotive industry sees great promise in consumer demand for hybrid and other alternative fuel vehicles, and that the industry plans to build and promote more hybrid and alternative fuel vehicles over the next 5 years.

Today comes another story that puts a little meat on those bones. According to a study by Thomson Reuters, alternative power and pollution control have become the biggest source of patent activity in the automotive industry, surpassing perennial leaders such as engine design, braking systems and safety in 2009. Together they accounted for 23% of the patents issued within the automotive industry last year, with alternative power accounting for 14% and pollution control accounted for another 9%.

The report notes that "Only unique patent inventions were counted, providing the truest picture of innovation activity."

While it is too soon to tell whether any of these patents represent significant technological breakthroughs, the trend is encouraging. Obtaining patents is an expensive and time-consuming process. The issuance of patents in the areas of alternative power and pollution control means, at a minimum, that the automotive industry is serious about these technologies. It also suggests that the industry has been shifting R&D money to these areas for some time.

The Thomson Reuters study, 2009 Innovation Report: Twelve Key Industries and Their States of Innovation, tracks unique inventions in granted patents and published applications within 12 key industries. Click here to gain access to the full report.

John Howley
Orlando, Florida

KPMG Survey Suggests Shift Towards Hybrid and Alternative Fuel Vehicles

Senior automotive executives are expected to increase their investment in new technologies to produce more environmentally-friendly, fuel-efficient vehicles. This is the conclusion reached by the 11th annual global automotive survey conducted by KPMG LLP, the US audit, tax and advisory firm.

Of the 200 senior executives surveyed worldwide, nine in ten expect manufacturers and suppliers to focus on new technologies, while 88 percent predict manufacturers will increase investment on new models/products and 78 percent say suppliers will do the same.

Hybrid Seen As Most Important Fuel Technology

When asked to rate the importance of alternative fuel technologies over the next five years, hybrid fuel systems came out on top (almost 85 percent), followed by battery electric power (68 percent), fuel cell electric power (63 percent), and biodiesel (42 percent).

"The consumer mindset on fuel efficiency is forcing automakers to build more fuel efficient cars and to create new product that satisfies demand,"said Gary Silberg, National Automotive Industry leader for KPMG LLP.

The survey results come on the heels of sales data released earlier in the week showing that 2009 industry sales in the US were 21.2% lower than sales in 2008.

Fuel Efficiency Cited As Key Purchase Factor

The key question of course is: How much of the emphasis on fuel efficiency is the result of economic conditions, how much is due to stubbornly high fuel prices, and how much is due to climate change and environmental concerns?

The survey suggests that both fuel efficiency and environmental friendliness are driving consumer demand. When asked what would influence consumer purchase decisions over the next five years, fuel efficiency was most frequently cited (94 percent), fairly flat from last year's high of 96 percent, followed by environmental friendliness (just over 80 percent). Other consumer desires were significantly lower including safety innovation (71 percent) and vehicle styling (61 percent).

When asked which vehicles the executives expect will see sales increases over the next five years, hybrid fuel vehicles (almost 93 percent) were most frequently named, followed by other alternative fuel vehicles (83 percent), low cost or introduction cars (82 percent), cars (66 percent), cross-overs (46 percent) and small pick-up trucks (just under 45 percent).

Most surprising were the responses on incentives, including discounts, rebates and free offers. When asked to name which vehicles might see an increase in incentives during the next year, the top prediction was SUVs (53%). But almost an equal number of the auto executives surveyed responded that incentives would be increased for hybrid fuel vehicles (almost 50 percent) and other alternative fuel vehicles (48 percent).