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Despite Shaky Sales, Hybrids Here To Stay

Despite shaky sales, Hybrids are here to stay

Despite shaky sales, Hybrids are here to stay

Toyota is expanding its hybrid Prius line to include both bigger and smaller models.  The new Prius V was designed for greater storage space in its larger rear hatch, and the soon-to-arrive Prius C will be a smaller version for city drivers.  There is a trend in the hybrid market towards providing more options for potential customers.  For instance, in 2009 there were 17 hybrid models on the market, and at the start of 2011 there were 30.

But these expansions come in the hope of securing a larger market, rather than in response to an already present demand.  “When you look at sales, you have to say that hybrids have not been accepted,” said Scott Doggett, associate editor of Edmunds’ AutoObserver.com.  The hybrid market peaked in 2009 at 2.8% of all new vehicles sold, dropping to 2.4% in 2010.  Data from industry analysts projects it to drop slightly below that figure this year.

Cost-benefit ratios are thought to be one of the bigger limiting factors to hybrid sales.  Not only do hybrids cost more than their gasoline-powered equivalents, gas prices are not high enough that owners would recover these extra costs through lower fuel demand.  For instance, automotive web site Edmunds.com reports that a Ford Fusion Hybrid costs about $5,000 more than the non-hybrid four-cylinder Fusion.  This is after dealer discounts and rebates.  To sell more hybrids, “gas prices will have to go up,” says Todd Turner, an industry consultant with Car Concepts.

The most successful hybrid to date is Toyota’s original Prius, which is the company’s third most popular car.  The Prius holds many advantages over its competitors, including the best fuel economy of any hybrid – 50 miles per gallon with combined city and highway driving.  It is also a vehicle without a non-hybrid version to compete with, fitting between the Corolla and Camry in size.  This helps the Prius avoid cost-benefit comparisons with gasoline-powered vehicles, and makes it obvious that it is a hybrid.  Customers may feel the environmental statement they make in driving it justifies a higher cost.

Technology may be its own worst enemy when it comes to the hybrid market.  J.D. Power’s most recent U.S. Green Automotive Study found that many customers were waiting to see what new technology developed before committing to a hybrid.  In the meantime, expect the number of hybrid models to keep growing, and a stronger attempt to create a market for them.  Toyota “is committed to hybrids being a core strategy,” said Bob Carter, group vice president and general manager for Toyota Motor Sales USA.

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Brent has an unusual background, an experienced CA who specializes in marketing applications. An accomplished artist, Brent also contributes to the Business and General News categories.

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