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Consumers Are Price Sensitive To Energy-Efficient Majaps

Despite a looming energy crisis and rising power costs, consumers are unwilling to pay more for energy-efficient appliances that could trim their electric bills.

That’s the conclusion drawn by NPD Intelect Market Tracking, a market research firm based here. According to data collected across key retail channels, unit share of Energy Star washers grew just 0.6 percent in the first quarter compared to the year-ago period, while the unit share of like-rated refrigerators fell 0.5 percent, trailing their less efficient — and less costly — counterparts.

NPD surmises that the steep price premium commanded by high-efficiency white goods over standard models — 127 percent for washers and 145 percent for refrigerators — is the chief culprit behind curtailed sales. By contrast, unit share of Energy Star dishwashers, which generally carry a relatively modest 30 percent premium, rose 7.2 percent during the first quarter.

“Our data show that consumers are willing to pay a modest increase to get energy efficiency, but they will not double the price to get the benefit,” said NPD director Donna Wallace. “The $500 to $600 differential charged for purchasing an energy-efficient refrigerator or washing machine, as opposed to a $100 increase for an energy-efficient dishwasher, is more than the market will bear. They calculate the payback in saved energy bills, and it doesn’t compute.”

Indeed, non-Energy Star rated refrigerators commanded 91.6 percent of total category share during the first quarter, compared to 8.4 percent for high-efficiency models. Similarly, share of non-rated washers stood at 92.8 percent during the period, compared to 7.2 percent for Energy Star units. Only energy efficient dishwashers held their own, with Star-rated units representing 40.4 percent of unit share compared to 59.6 percent for non-compliant models.

The higher price tags of the Energy Star models reflect the huge costs to vendors to redesign, re-engineer and re-tool their majap platforms and plants in order to meet more stringent efficiency standards mandated by the U.S. Department of Energy. Consumers will be forced to ante up for the new units after manufacturers stop making non-compliant majaps, with low-income households feeling the impact the most.

The Price Ain’t So Right

(Average Retails of Energy Star vs. Standard Majaps)