Some interesting changes are occuring in the hybrid market. Back in June 2005 with the introduction of the Toyota Highlander SUV Hybrid, the hybrid SUV market hit 34% of the total hybrid market. From that point, until January, 2006, the SUV market has hovered around 30%. In February, the market increased to 39%. In March, it stayed at 39% and in April, the SUV market has increased to 43%.

Perhaps this shouldn’t be surprising since four of the ten hybrids available today are SUVs, but the number of hybrid car types has been increasing, not the number hybrid SUVs. Also, the biggest player, the Toyota Prius, has run into production limits, limiting its market share.

This increase in the hybrid SUV market is related to the increase in gas prices, greater marketing efforts by Toyota and Ford, as well as recent incentives being offered by Ford on its Mercury Mariner Hybrid and Ford Escape Hybrid including 0% financing.

Its unlikely the SUV market will become the majority, simply because of the number of car alternatives are increasing at a faster rate. For instance, the Toyota Camry Hybrid and GS 450h were just introduced into the North American marketplace during the last week in April.

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GM Chief Executive Rick Wagoner has been and will continue to be cautious in his approach to hybrids. In the meantime, GM is going to keep developing bigger vehicles that will also have better fuel economy.

Wagoner also expects gas prices to come back down based on the current supply and demand equation for oil. He is predicting gas prices will not “get to a price range when it would affect behavior”. He expects gas prices would need to be well over $3 a gallon in order to significantly hurt consumers.

In the meantime, Wagoner is uncertain about the future for hybrids.
MarketWatch

“A question I’m often asked is: How big the hybrid market could get to be? The honest answer to that is, I don’t think anybody really knows. If you believe we’re going to be at $120 (per barrel oil price) for a long period of time, the answer is a heck of a lot more than if you believe $60. Consumers will drive this. Our focus is to make sure we have the capability.”

GM is launching its new Saturn Vue Green line later this year. Its base price should start at $23,000, which puts it well below other hybrid SUVs. But, the Saturn Vue Green is not a full hybrid in the sense that the electric engine is not capable of running the vehicle at low speeds. The gas engine will shut off when the vehicle is stopped and regenerative breaking is used to recharge the batteries. But the conventional gas engine gets 22/27 mpg with an automatic transmission. The hybrid will improve that EPA esimate to 27/32 mpg.

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And the reason is simple. Price. The Prius has a distinctive look and feel, and does not have a ’sister’ all gas model to compare to.

The other hybrids do have that direct comparison, and consumers are having trouble justifying the upfront costs, despite the tax break and long term gas savings.

This is especially true for the larger hybrids such as the Toyota Highlander Hybrid and Ford Escape Hybrid. Chances of consumers forking over $6,590 more for the hybrid as opposed to the six-cylinder gas-only Toyota Highlander model are slim.

According to a story in the USA today, “The Lexus RX 400h sat on dealer lots an average of 32 days in February, five days longer than the conventional RX 330, Power reports. Honda Accord hybrid was averaging 49 days to sell in February, compared with 31 for the conventional version.” Also, Ford is offering 0% financing or $1000 back in savings on the Ford Escape, while Toyota is offering 3.9% financing on Highlander in many larger cities.

Of course, the last issue is gas prices. Hybrid sales follow the price at the pump. As prices have stabilized, so have sales. If a jump in prices occurs, expect a similar jump in sales, even on the SUVs.

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Hybrid Car sales in 2007 are going to be determined by many factors. These include gas prices, federal and state tax credits, new models arriving, new clean diesel sales (as well as other alternative gas engine fuels), and finally, the continued reliability of the hybrid cars that are out there.

Gas prices and hybrid car sales tend to follow each other closely. Gas prices are expected to stay around what we’ve seen in the past year. Unless some other natural (or man-made) disaster occurs, what we see now is what we should expect to see with some fluctuation up and down (the EIA is projecting prices to go down slightly). This stabilization should keep a downward pressure on hybrid car sales.

Toyota has broken through the 60,000 units sold barrier for the federal tax credits. And so, since October, federal tax credits were halved on all Toyota hybrids sold. Toyota has publicly blamed the lack of an increase in hybrid sales on that reduction. But on the other half of that coin, Toyota is still selling three of the four most popular hybrid vehicles on the road.

Also, no other car maker is likely to break through that barrier in the next year. Despite a rash of new hybrid vehicles that will be coming out and will be eligible for the federal tax credit, Toyota seems to have taken a huge lead in hybrid image, with the Prius especially becoming synonymous with hybrid. So, I don’t expect this to have a huge affect on hybrid car sales in the coming months, even after Toyotas credits get halved again in March.

Various states and cities are considering or are offering other incentives, from car pool lane preferences to tax credits to free parking. As more incentives are offered, more buyers will pull the trigger.

I do expect large increases in sales due to the new models coming out in 2007. Despite being disparaged as not a full hybrid, the Vue hybrid sold 700 units in October. As each new hybrid models get released, I expect corresponding big jumps in hybrid car sales. Especially when the Nissan Hybrid Altima comes out, even in its limited sales areas. Other new hybrids expected to hit the road in 2007 include the Saturn Aura, the Chevrolet Equinox, Malibu, Tahoe, GMC Yukon, and Chevy Silverado.

Other issues hybrid car sales will face is competition from other alternatives to the traditional internal combustion engine (ICE). These include new clean diesel engines and bio-fuels. Hybrids will fight back with better gas mileage (the next generation Prius will possible get 90+ mpg, for instance) and by plugging in. Also, you may see more mergers between the alternatives, as diesels become hybrids.

One other issue that may affect hybrid cars in 2007 is their continued reliability and the continued satisfaction hybrid car owners have. Despite being accused of smugness in 2006 (ie. South Park), hybrid car owners have shown very high satisfaction (consumer reports survey) with their choices and rightly so based on the reliability of hybrids so far. It will be hard to maintain such high ratings as new hybrid cars (from automakers with lower reliability ratings) enter the field, but we’ll just have to wait and see what happens.

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According to a recent Gallup poll, 57% of Americans would consider buying or leasing a hybrid when they next purchase a car. Upper-income Americans are slightly more likely than lower-income Americans (62% vs. 55%) to say they would seriously consider buying a hybrid when purchasing their next car.

Younger (64%, age 18-49) and middle aged (55%, age 50-64) Americans are more likely to consider hybrids than seniors (39%).
hybrids appeal much more to younger and middle-aged Americans than to seniors. Sixty-four percent of adults aged 18 to 49 say they would seriously consider a hybrid for their next car. This is only slightly lower (55%) among those 50 to 64, but drops to 39% among those aged 65 and older.

Lower income Americans have been cutting back on driving due to gas prices. When making less than $50,000 a year, 59% of the respondents said they had cut back on driving, while only 36% of those making $50,000 or more have cut back. But 48% of those in the upper income bracket have cut back in other areas due to gas prices, while 60% of lower income have made cuts elsewhere in their spending.

Gallup poll

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Hybrids and subcompact cars are experiencing a significant drop in ’searches’ over at cars.com from last month for the second month in a row, while searches for SUVs and other large vehicles are rising.

While gas prices remain relatively low, it’s likely that interest in larger vehicles will continue to increase, while more efficient (hybrids) and smaller vehicles get less interest. When cars.com took a look at the past months searches the number of people interested in the Honda CR-V, for instance, had increased 72%.

What I’d like to see is a comparison to last years numbers, not just last months. As with car sales, the change in interest could be seasonal, so looking month to month, while interesting, doesn’t tell the same story. Perhaps (and I’m just making this up), consumers are more interested in larger cars as we head into the winter months?

I spotted this story over at autobloggreen.

Source for press release: reviewjournal.com — PR Newswire Press Releases

Searches for Large SUVs on Cars.com Continue to Rebound as Gas Prices Decline

CHICAGO, Nov. 9 /PRNewswire/ — Large, truck-based SUVs continue to see
an increase in search activity on Cars.com as gasoline prices fall to their
lowest level in nearly a year. According to the most recent Cars.com
Consumer Search Index, cars like the Nissan Armada, Jeep Commander and
Infiniti QX56 topped the list of vehicles experiencing the largest increase
in searches last month.
For the second month in a row, subcompact cars and hybrid vehicles –
which were some of the most popular cars a few months ago — top the list
of cars experiencing the largest decline in searches.
“At this point, it seems like some of those searches are translating
into sales, as most automakers reported upticks in truck and SUV sales,”
said Patrick Olsen, Cars.com’s managing editor. “It will be interesting to
see if SUV sales keep their momentum as we head into 2007.”
Vehicle Searches (October)
Models with the most searches performed on Cars.com.

Top New-Car Searches Top Used-Car Searches
1 Honda Civic 1 Honda Civic
2 Toyota Camry 2 Honda Accord
3 Honda Accord 3 Ford Mustang
4 Acura MDX 4 BMW 325
5 Honda CR-V 5 Toyota Camry
6 BMW 325 6 Ford F-150
7 Toyota Corolla 7 Toyota Tacoma
8 Toyota RAV4 8 Toyota Corolla
9 Chevrolet Silverado 9 Chevrolet Corvette
10 Ford Mustang 10 Jeep Grand Cherokee

Search Increases (September – October)
Models with the largest increase in the number of searches performed on
Cars.com.

Top New-Car Search Increases Top Used-Car Search Increases
1 Honda CR-V 72% 1 GMC 2500 25%
2 Jeep Wrangler 22% 2 Nissan Armada 24%
3 Chevrolet Silverado 15% 3 Jeep Commander 20%
4 Acura MDX 15% 4 Lincoln Aviator 18%
5 Acura TL 9% 5 Chrysler 300C 18%
6 Dodge Charger 8% 6 Infiniti QX56 18%
7 Jeep Grand Cherokee 7% 7 Acura MDX 17%
8 Infiniti G35 5% 8 Chevrolet 3500 17%
9 Dodge Ram 3% 9 Cadillac DTS 16%
10 Nissan 350Z 2% 10 Volkswagen Touareg 16%

Search Decreases (September – October)
Models with the largest decrease in the number of searches performed on
Cars.com.

Top New-Car Search Decreases Top Used-Car Search Decreases
1 Nissan Versa 28% 1 Honda Insight 26%
2 Toyota Yaris 24% 2 Toyota Echo 25%
3 Toyota Prius 22% 3 Toyota Yaris 19%
4 Honda Civic 16% 4 Geo Metro 18%
5 Volkswagen Jetta 16% 5 Nissan Versa 17%
6 Toyota Camry 16% 6 Volkswagen Cabrio 17%
7 Toyota Corolla 16% 7 Toyota Prius 16%
8 Chevrolet Cobalt 12% 8 Toyota Camry Solara 15%
9 Hyundai Sonata 11% 9 Jeep CJ-7 15%
10 Scion tC 11% 10 Cadillac Catera 14%

Top Dealer Email Inquiries (October)

New Cars Yielding the Used Cars Yielding the Most Dealer
Most Dealer Inquiries Inquiries
1 Honda Civic (2006) 1 Honda Accord (2003)
2 Toyota Camry (2006) 2 Honda Civic (2000)
3 Toyota RAV4 (2006) 3 Infiniti G35 (2003)
4 Honda Accord (2006) 4 Ford F-150 (2004)
5 Toyota Sienna (2006) 5 Honda Accord (2002)
6 Honda Odyssey (2006) 6 Ford Mustang (2003)
7 Toyota Corolla (2006) 7 Honda Civic (1999)
8 Honda CR-V (2006) 8 Ford Mustang (2004)
9 Toyota Tacoma (2006) 9 Honda Civic (2002)
10 Honda Pilot (2006) 10 Volkswagen Jetta (2003)

Top Cars Listed for Sale by Owner (October)

1 Honda Accord
2 Ford Mustang
3 Chevrolet Corvette
4 Ford F-150
5 Ford Explorer
6 Honda Civic
7 Jeep Grand Cherokee
8 Dodge Ram
9 Mercedes-Benz E-Class
10 Porsche 911

About the Cars.com Consumer Search Index
The Cars.com Consumer Search Index offers a comprehensive look at the
internet search behavior of Cars.com visitors. The statistical information
is compiled by tracking the more than 8.3 million unique visitors that log
on to Cars.com each month and the vehicles that are most popular. The lists
are based off a minimum of 10,000 searches for new cars and 15,000 searches
for used cars. Dealer inquiries measure the volume of emails consumers send
to dealers seeking information about a particular vehicle. The information
is supported by expert analysis from the Cars.com editorial staff.
More statistical information to support automotive-related stories is
available upon request. Please contact Steve Nolan directly at
312-601-5163.
About Cars.com
Partnered with more than 200 leading metro newspapers, television
stations and their websites, Cars.com is the most comprehensive destination
for those looking to buy or sell a new or used car. The site lists more
than 1.8 million vehicles from 12,000 dealer customers, classified
advertisers and private parties to offer consumers the best selection of
new and used cars online, as well as the content, tools and advice to
support their shopping experience. Recently selected by Forbes.com as a
Best of the Web site for car shopping, Cars.com combines powerful inventory
search tools and new-car configuration with pricing information, photo
galleries, buying guides, side-by-side comparison tools, original editorial
content and reviews to help millions of car shoppers connect with sellers
each month.
Launched in June 1998, Cars.com is a division of Classified Ventures,
LLC, ( http://classifiedventures.com ), which is owned by leading media
companies, including Belo (NYSE: BLC), Gannett Co., Inc. (NYSE: GCI), The
McClatchy Company (NYSE: MNI), Tribune Company (NYSE: TRB) and The
Washington Post Company (NYSE: WPO).

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The USPS is unveiling a hybrid delivery vehicle, powered by Azure’s hybrid electric powertrain at a special event being held in Boston. According to one source, every one cent increase in gas prices translates into an annual $8 million increase in gasoline costs.

According to the press release, this will be the USPS first converted hybrid electric vehicle. The event will showcase learning about hybrid technology as well as other alternative-fuel vehicles. Sott Wimmer, NASCAR driver will be available for photographs.

Hear remarks from Walter O’Tormey, vice president, engineering, USPS; and Campbell Deacon, CEO, Azure Dynamics Corporation. Azure Dynamics is a developer of electric and hybrid electric powertrain systems. These systems can convert conventional Postal Service mail-delivery trucks to hybrids.

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A large majority (74%) of consumers say carmakers are not moving fast enough to build more fuel efficient cars according to a new Harris poll. In the meantime, 44% of those surveyed say they are cutting back on products or services in order to pay for the increase in the price of gasoline.

And they are blaming the oil and gas companies for the rise in prices, too. Thirty-nine percent blame the oil and gas companies for wanting more profits, while only twenty-seven percent blame world crude oil prices.

As for who can stop the rise in prices, thirty four percent think the oil and gas industry can do so, while twenty-nine percent believe the federal government has that ability. Twenty-two percent say consumers can can stop the increases.

And consumers are pessimistic about increases. Eighty-one percent believe heating prices will be higher this winter when compared to last winter, while seventy-five percent believe gas prices on Labor Day in September will be higher than they are now.

In the meantime, consumers are cutting back on other spending. Twenty-nine percent are cutting back on dining out and are reducing driving or staying home more. Twenty-four percent are cutting back on groceries, while eighteen percent are spending less on entertainment.

Harris interviewd 2,085 adults ages 18 and older in the US between May 9 and 16, 2006. I first spotted this poll over at green car congress.

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Toyota is launching its new Camry hybrid next month. While they have been advertising the new hybrid with an ad campaign targeting the hispanic market, they are hoping the new camry will have mass appeal.

According to a report at canada.com, even Toyota is unsure of how well this hybrid family car experiment will go. Despite their success in the hybrid market, recent downturns in Honda sales of its Accord have to make Toyota nervous in roling out their latest hybrid.

But despite any concerns, the Toyota Camry hybrid has several advantages over the Accord hybrid. First, its not emphasizing the hybrid performance, but hybrid economy. With a smaller engine and better mileage, its more likely to appeal to those who would think about paying more money for a hybrid.

But more likely to appeal to a mass audience is its sticker price. At $5000 less than the Accord hybrid, the Toyota Camry hybrid will certainly be more successful.

Toyota is also timing the release of the Camry hybrid well. With the recent increase in gas prices, hybrid sales have accelerated this month and will most likely continue to do so.

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As gas prices soar, there is growing talk and general interest in alternative engine types, including hybrid cars.

Gas prices have increased for several reasons the past few weeks. The switchover from the additive called MBTE to ethanol and the normal hike due to the summer traveling season have combined to set new highs in gas prices in areas across the country.

But there is a lot of misinformation going around about hybrid sales increasing (1,2, and 3) and decreasing at the same time. It seems that most reporters would just like to make a surface examination and move on without exploring further.

It seems that most reporters feel the Prius sells well because of its distinctive look, but the other hybrids have not succeeded since their designs are so similar to those of their gas only counterparts. But what’s really making a difference in sales is the reputation of the car maker and design of the hybrid car itself.

For instance, despite the increase in gas prices, performance hybrid sales have slipped in the past few months as consumers have shyed away from the extra cost without a gain in fuel economy. A Honda representative even suggested they may cut back on production of the Accord hybrid.

These performance hybrids have been losing ground to those hybrid cars developed for fuel economy, such as the Honda Civic and the Toyota Prius. Obviously, consumers are willing to pay extra for performance cars. But they do seem to be reluctant to spend more on hybrid performance.

For those who are looking for larger SUVs, but still want hybrid economy, the Toyota Highlander and the Lexus Rx400h have been the big winners so far. Not because they are that much better than the Ford Escape or Mercury Mariner, but because Toyota has a better reputation for quality than Ford does. And even though sales at Ford had slowed, sales of Ford hybrids have been increasing, especially in this past month, with the spike in gas prices.

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