Why Aren’t Hybrid Vehicles Selling?

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Why Aren’t Hybrid Vehicles Selling?
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In 2000, Toyota launched a breakthrough vehicle worldwide that one-upped the century-old method of automotive propulsion. The mid-size Prius hybrid hatchback was the world’s first mass-produced gasoline/electric car. It used both an internal combustion engine and an electric battery to make it go.

America falls in love with the hybrid — in theory

Hybrids were going to be “the next big thing” in the car business because they delivered two pivotal new benefits:

1. Unparalleled fuel economy, saving consumers big bucks on gasoline and reducing our dependence on imported oil. (The Department of Energy rated the 2013 Camry 2.5 liter hybrid at an average of 41 mpg vs. 28 mpg for the gasoline version.)

2. Dramatic reduction in environmentally harmful emissions. Hybrids can reduce emissions of smog-forming pollutants by up to 90% and cut carbon dioxide emissions in half.

Hybrids seemed tailor-made to knock the socks off the huge segment of our population that’s concerned about the impact of global warming. Two recent national studies confirmed the substantial size of that segment and the significant level of their concern.

1. The Experian Simmons’ 2011 GreenAware Consumer Segmentation Study found that 33% of us are “Behavioral Greens,” the group that most thinks and acts green. Another 21% are “Think Greens,” green supporters who don’t always act green.

2. The Yale Project On Climate Change Communication’s April 2013 study reported that 63% of Americans believe global warming is happening; 49% believe it’s caused mostly by human activities; 52% see it as a threat to the U.S.; and 34% believe it is currently harming some U.S. residents.

Why hybrids haven’t lived up to all the ballyhoo

The U.S. is a rolling junkyard. The average age of the 240 million cars and light trucks on the road is 10 years. Given hybrids’ two-pronged attack on the high cost of driving and environmental degradation, shouldn’t it have been a slam-dunk to sell them to those millions of environmentally concerned citizens? Didn’t they see hybrids as their Great Green Hope realized?

14 years after hybrids’ arrival, the answer is a loud, resounding “No.”

What’s been called “The Next Big Thing In The Car Business” has turned out to be “The Little Engine That Couldn’t.”

Hybrids have never achieved any significant market penetration. Americans bought 512,494 of them in 2013, a record year, but that was just 3 of every 100 new vehicles sold.

I’m not knocking those who love their hybrids; I applaud them. But there are several reasons why hybrids will remain a tiny percentage of new-car sales, starting with plain old common sense.

The main reason consumers buy hybrids is to save money on gas. I’ve talked to several hundred buyers, and overwhelmingly, that’s the first reason they mention. Saving the environment is a “feel good” secondary benefit, but without the gas savings, hybrids would die a quick death. Unfortunately, those who suffer most from the high price of gas can’t afford new cars. And over a certain income level, the price of gas is not a painful expense.

Other obstacles to hybrid sales

• They cost more than their non-hybrid counterparts. The hybrid’s base retail price is higher by $2,800 on a Camry XLE; $2,900 on a Sonata Limited; $3,000 on a Civic EX-L; $3,600 on an Accord EX-L; and $4,300 on a Jetta SEL. The premiums are higher on pricier cars.

• Most hybrids are based on the more efficient 4-cylinder engine. But many consumers demand more get-up-and-go.

• Many gasoline-only cars get better mileage per gallon than they did in 2000. Examples:

 EPA 4-Cylinder Base Model MPG Estimates
2000 City/Hwy 2013 City/Hwy
Honda Accord Sedan 23/30 26/35
Subaru Impreza 23/29 27/36
Nissan Altima 21/28 27/38
VW Jetta  
22/28    24/32

• Only one automaker – Toyota – has made the development and sale of hybrid vehicles a major corporate priority. Last year, 12 different Toyota and Lexus models accounted for 63% of U.S. hybrid sales and over 15% of the corporation’s total U.S. sales. (The Prius share was a whopping 41%.)

Together, Ford, General Motors, and Honda sold three times as many new cars last year as Toyota, but their combined hybrid share was just 28.5%, and hybrids were a tiny 2.3% of their total sales. These brands didn’t offer a single hybrid: Chrysler, Dodge, Jaguar, Jeep, Land Rover, Mazda, Mitsubishi, Subaru, Land Rover, and Volvo.

Will electrics be the next hybrid?

Automakers aren’t dumb. They profit by producing what’ll sell. If everyone wanted plaid cars, they’d be on every dealer’s lot. MacPherson Dress Green. Bannockbane Blue. Pitcairn Hunting. Hebridean Mist. You get the idea!

After 14 years, it’s clear that the consumer demand for hybrids is quite small and likely to remain so. In any minor product segment, the company that gets there first and keeps its pedal to the metal ends up with the lion’s share of the business. That’s what Toyota has done. It’s probably the only automaker making a significant profit selling hybrids.

The Prius has been the best-selling car in California for the last two years. I see them everywhere. Buy one. It’s a great car. You’ll probably have the only one on your block. (Except in California.)

Now, the industry’s new “next big thing” is electric cars. So I’ll be saving this piece for 14 years. Only the names will be changed to protect the innocent.

Editor’s note: Read why Clark decided to buy a Tesla S, an all-electric car.


About the author: James Bragg has been a full-time consumer advocate/activist for over 20 years as the day-to-day, hands-on founder/manager of FightingChance.com, a national information service that’s helped over 125,000 consumers buy or lease a new vehicle for the lowest price. His latest book is a revised edition of Letting the Cat out of the Bag: How the Auto Industry “Redesigned” the Dealer Invoice Price When the Internet Arrived, available in paperback and Kindle versions.

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James Bragg About the author:
James Bragg has been a full-time consumer advocate/activist for over 20 years as the day-to-day, hands-on founder/manager of FightingChance.com, a national information service that’s helped over 130,000 consumers buy or lease a new vehicle for the lowest price. His latest book is a revised edition of Letting the Cat out ...Read more
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