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Study: Hybrid sales may have peaked

Consumers have adjusted to higher fuel prices and gas-powered cars are more efficient, causing hybrid technology to lose its luster.

By Douglas Newcomb Jun 10, 2014 10:33AM

Toyota Prius V. Photo by Toyota.Gas prices have been a deciding factor in hybrid sales since the fuel-efficient vehicles first arrived in showrooms. But as drivers grow accustomed to higher prices at the pump and more hybrids have become available -- although the premium paid for the technology hasn’t varied much -- hybrid sales may have plateaued.


A new analysis from the Automotive News Data Center and IHS/Polk predicts that hybrid sales may be ebbing in terms of market share and volume -- even with high gas prices as the new norm.

 

 "People have realigned their budgets to $4 gas and they are making it work," AutoPacific analyst Dave Sullivan told Automotive News. He added that a big jump in gas prices could make more buyers reflexively consider hybrids. But according to AAA, the national average price of gasoline this summer is predicted to be between $3.55 and $3.70 per gallon.
 

Because of this, "hybrids are not all that compelling at the moment," Sullivan said.

“It's a financial situation," IHS Automotive analyst Tom Libby told Automotive News. "The hybrid price premium is not offset by the gas savings, and consumers are making a rational decision. The more gas prices stay static, the more consumers adjust and move back toward what they are more comfortable with." 

 

And what they’re comfortable with are traditional gasoline-fueled cars, which are more fuel efficient than ever. This makes it even more difficult to justify paying a higher price for a hybrid, with the idea of recouping the cost over several years via fuel savings.
 

Alternative-fuel vehicle sales in the U.S. more than doubled from 274,749 in 2010 to 594,485 in 2013, according to the Automotive News Data Center. But this group also includes plug-in hybrids, battery electric and natural gas vehicles, and came at a time when overall car sales rose sharply from a decline during 2008 and 2009.

 

An IHS/Polk study revealed that although the number of hybrid models on the U.S. market almost doubled in the past five years -- from 24 in 2009 to 47 currently -- the market share of the segment compared with overall vehicle sales has fallen. IHS/Polk said that the hybrid share dropped from 2009 to 2010, when it hit 2.5 percent, and again so far from 2013 to 2014, where it stands now at about 3.5 percent. Compared with the surge in total car sales, hybrids should be selling in much higher numbers -- but they're not.
 

The Toyota Prius -- the poster child for hybrid technology -- just had its best sales in two years for the month of May. But Automotive News said this was due more to pent-up demand after the long winter than with a gasoline price surge.
 

And it also could be because of the highest incentives Toyota has ever offered on the Prius: $2,334 per unit. Although four different vehicles are now badged as a Prius, Automotive News pointed out that sales of the models were down 1 percent last year.
 

Other automakers are also offering strong incentives on hybrids. Lincoln is pushing the MKZ Hybrid by pricing it the same as the gas-powered MKZ, while Hyundai is currently offering a $2,000 “bonus cash” on the 2014 Sonata Hybrid.
 

AutoPacific’s Sullivan said another reason for the slowdown in demand is that the green credibility of driving a hybrid has lost some of its luster. "We're not seeing so much, 'rah-rah, Mother Earth.' The Prius V has not come close to meeting sales expectations and the regular Prius is aging. Consumers are moving on." 

 

[Source: Automotive News]

107Comments
Jun 10, 2014 11:15PM
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Wow...! Our family can barely afford the high gas prices....

And there is No Way we can afford a NEW car...Our best effort is to

keep buying Used cars..? America has changed..and its Not for the Better  folks...

Jun 11, 2014 2:25AM
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The problem is, even if you could afford the hybrid, the payback isn't there. The avg cost increase per car over a standard gas powered car, financed over the 6 years or however long it takes to pay it off, is more than the fuel mileage saved by owning a hybrid. Not to mention the higher cost to own.
Jun 11, 2014 3:35AM
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Based of if you drive a gas hog like I did for 10 years and now if I drive my hybrid for 10 years. Then its probably worth it. A full tank on my 2004 F-150 would take me about 400 miles. (13 MPG Tank full city and highway) A full tank on my 2014 Ford Fusion Hybrid takes me about 530 miles. (45 MPG Tank full city and highway). For gas cost alone it save me 75%. An older vehicle has about $100-200 dollars a month for Maintenance repairs like Tires, brakes, mufflers, etc. My Truck sticker price in 2004 was about $30,000, and 10 years later my 2014 sticker price for my Fusion Hybrid was $33,000 with lower interest rates than my truck had. I don't think this upgrade to buying a hybrid will work  for everyone as well as it did for me. IT WAS A BIG CHANGE IN MY WAY OF THINK OF HOW TO GO FROM POINT "A" TO POINT "B". Extreme differences in vehicle type. You have to be patient to get the savings.
Jun 11, 2014 3:21AM
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My now one year old Ford C-Max gets 49-51 MPG.  That's double what my Jeep Patriot was getting.  As I pay $140 per month for gas now, I am saving an additional $140 per month.  Since my car only cost me a few thousand dollars more than what a new Jeep would cost and I am saving $1680 per year in gas and not having to stop twice or three times a week at a gas station, the Hybrid is more than worth it.
Jun 11, 2014 5:21AM
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I notice the headline used words "may have peaked". Later in article Newcoumb states:


"Alternative-fuel vehicle sales in the U.S. more than doubled from 274,749 in 2010 to 594,485 in 2013, according to the Automotive News Data Center."


Almost all of these are not "plug-in"  hybrids and regular hybrids like the Prius are not alternative fuel vehicles. He also pints out that models available have increased from 24 to 47.  There are really only about 15 true hybrids; the rest are expensive marketing gimmicks that make no economic sense.


The biggest reason hybrids have cooled off a bit is because car manufactures have squeezed higher mpg out of ICE vehicles. Ford is going to make the new F150 out of aluminum and many cars are shedding weight. However, with both lighter weight AND hybrid technology, mpg can reach the lofty goals Obama set by 2020. The hybrids are here to stay; the price premium will continue to fall;  gas prices will inevitably continue to rise.  95% of all Prius made are still on the road commanding high resale value.


Then there is the political factor. Most hybrid owners tend to be environmentalists and believers in human caused climate change along with wanting to spend less on gas and avoid "oil wars".  The GOP and Big Oil have done an effective job planting doubts about climate change in the public's mind. Most tea party people feel threatened by change...any change. If it's not in the Bible or Constitution it must be suspect. The only reason they probably didn't feel threatened by the automatic transmission in the 50s is because Big Oil blessed it.     

Jun 11, 2014 4:59AM
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The thing that makes me think twice about a hybrid is, how am I going to get the thing fixed? There are not a whole lot of independent, non-dealer mechanics out there yet who know much about working on these things. It seems like a trick to get people to bring their cars into the dealer for repairs.

I'll wait 10-20 years for the expertise to circulate out into the general auto repair world.

Jun 11, 2014 5:05AM
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Obviously, gas powered vehicles are well received.  Hybrids are part gas, part electric.  If they have "peaked", is it the gas part or the electric part?  Once again...obviously it is the electric part.  In many cases, the electric part causes much higher purchase price.  And the electric part fails to provide an advantage over a similar gas only vehicle.  But then the vehicle is "used" and you want to trade it or sell it...and the used value does not reflect the higher purchase price at all.  Oopsie!!
Jun 11, 2014 6:55AM
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Part of the green credibility problem is that the Prius badge has devolved from "Rah-rah Mother Earth" to "I'm an annoying, prissy, eco-elitist.". 
Jun 11, 2014 6:17AM
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We traded in our Ford Edge with the 2.0 EcoBoost engine for a Ford C-Max.  The EcoBoost was getting 18MPG (mainly because the Edge is WAY too heavy for it) and now we are averaging about 40 - 42 MPG (Mainly because I still have a lead foot).  While we spent more on the front end, with the amount of drivign we do, we will be saving money after just 2 years of owning it.  And I agree, not all hybrids are slow.  I drove from Norfolk to Baltimore in 3 hours, doing about 85 MPH, and still averaged 41.6 MPG, and I checkled every time I passed a Prius...lol.
Jun 11, 2014 6:27AM
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Ford didn't take any stinking bale out money.........And they make some dam good cars and trucks
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