Will 2008 Be The Year of the Hybrid Vehicle?
With gas prices staying high and no decline in sight and the broadest range of options ever available, will 2008 be the year that hybrid cars finally make a major breakthrough in the U.S. market?
It's not likely, according to a new survey from BuyingAdvice.com. There is still a not a majority of new buyers interested in hybrids as only a third of those polled said that they were considering a hybrid for their next vehicle.
This despite a 2007 buying season when hybrids came more into the mainstream of the U.S. car market than ever before.
The sample of 3222 was taken from among the 50,000 new car buyers who use the web site's online price quote service each month. Participants stated they were within 30 days of buying a new vehicle.
"Up until this year, most hybrids were in short supply and could command a premium price," says retired car dealer and long-time industry observer Earnest Jordan. "But in 2007 the manufacturers stepped up production, just as the market took a down turn. And we started to see some price cutting and sales incentives on the more popular models for the first time," he said.
Still the most crucial obstacle to the wider acceptance of the hybrid seems to be the sales price. Hybrids typically command a premium of several thousand dollars above the top of the line conventionally-powered equivalent of the same model.
Fifty percent of those polled said that lowering the price would make them more likely to consider a hybrid for their next vehicle. Broadening the range of hybrid models on the market was the second most popular factor that would stir more buyer interest, as this response was chosen by 20 percent of the sample.
Fifty-eight percent of those surveyed said they believed that hybrids offer overall cost savings. This figure indicates a general acceptance among online buyers that hybrids can increase savings. However, recent studies have questioned just how realistic those expectations are.
"With the increasing number of hybrid sedans and SUV's, there are more and more models where the gap in fuel consumption is far smaller than in the original compact hybrids that were built around the principal of saving gas. Also, once the difference in repair costs, insurance rates and depreciation is included, the cost comparison becomes very complicated" says Jordan.
What is clear is that owners will have to drive a hybrid vehicle several years and for long distances in order to rack up enough gas savings to offset the higher retail price they paid for a new hybrid. Size significantly influences the potential savings that a hybrid model can hope to achieve. Larger hybrids have a narrower gap in fuel consumption, compared to their gasoline models, and therefore require even more mileage to make up for their higher retail price.
"It is far harder to build larger vehicles that produce significant fuel savings with current technology. Indeed, most of the popular sedan hybrids basically offer the same fuel consumption as a regular four cylinder sedan with the performance of a six cylinder engine. So if fuel consumption is your major concern, you can simply buy a regular four cylinder at a considerably lower price."
But saving money may not be the primary reason buyers are purchasing hybrids these days. The other benefit of hybrid technology is reducing emissions. "I think we are still at the point where the environmental argument is much more persuasive than the pure gas saving argument" says Jordan.
Whether increased environmental awareness will amount to a significant, new automotive market is yet to be seen. "From a marketing stand-point the question is just how strong the consumer demand for a greener vehicle really is," Jordan explains. The recent survey conducted by BuyingAdvice to gauge buyer interest, shows that there is a need for a broader range of hybrid vehicles at lower-prices in order to push hybrid interest into the mainstream.
In 2006, hybrids represented about 1.5 percent of new car sales in the U.S. The number of hybrids sold has shown significant growth every year since 2000, with the Toyota Prius being the most successful model. However, in October 2006 the Prius lost its federal tax credit for the first time due to overall sales volume. Official figures for 2007 are not yet available. But last December, some reports indicated that hybrid sales were up at least 80% compared to year to date figures from the previous year, putting hybrids at about 2.8% of all light-duty vehicles sold.
Published on Friday, January 25, 2008 - Email to a friend
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