Suddenly, hard going for hybrids

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As we all know, there’s a yawning chasm worth of differences between commercial truck buyers and consumer-grade automotive shoppers.

Yet if there is any one common bond shared between the two groups, sticker price is probably it – and right now, at least according to a recent survey, the high cost of hybrids relative to traditional gasoline-only light vehicles is becoming a bigger stumbling block, even though fuel prices are back at ultra-high levels.

According to a recent study by automotive consulting firm Polk, only 35% of hybrid vehicle owners chose to purchase a hybrid again when returning to market in 2011 – even though the selection of hybrid models in the U.S. has more than doubled since 2007. Polk added that if repurchase behavior among the high volume audience of Toyota Prius owners isn't factored in, hybrid “loyalty” drops to under 25%.

Polk's research also indicates that volatility in fuel prices between 2008 and 2011, which ranged from just under $2 per gallon to nearly $4 per gallon, had little impact on hybrid segment loyalty. 

Also, surprisingly, Polk also found that consumers in traditional eco-friendly markets in the U.S. – such as Los Angeles, San Diego, Portland, OR, and Seattle – are no more loyal to hybrid vehicles than the nation at large. 

“The repurchase rates of hybrid vehicles are an indication that consumers are continuing to seek alternative solutions to high fuel prices,” said Brad Smith, director of Polk's loyalty management practice, who added that hybrid vehicles now represent just 2.4% of the overall new vehicle market in the U.S., down from a high of 2.9% in 2008. 

[That dip isn’t stopping hybrid vehicle development efforts, though, by any means. For example, watch Sharif Marakby, Ford Motor Co.’s director of electrification programs and engineering, detail the some of the company’s latest advanced in hybrid transmission technology.]

Lacey Plache, chief economist for Edmunds.com, added that hybrid sticker prices are now big stumbling blocks, especially as fuel efficiency is now increasing by leaps and bounds for far less pricier gasoline-only models.

“The lineup of alternate-drive vehicles and their premium price points just aren't appealing enough to consumers to give the segment the momentum it once anticipated, especially given the growing strength of fuel economy among compact and midsize competitors,” Plache said.

“For EVs [electric vehicles] and PHEVs [plug in hybrid electric vehicle] in particular, certain obstacles – including consumer unease with unfamiliar technology and the lack of an adequate recharging infrastructure – will need to be overcome before sales increase,” she explained.

That concern over range should not be taken lightly either, cautioned Mary Ann Wright with the power solutions division of Johnson Controls, Inc., in testimony before Congress a few years back.

“Range anxiety on the part of consumers remains a substantial challenge for EV adoption,” she said. “People are afraid that their vehicle will be incapable of travelling the long distances required, or that they will be unable to get the necessary recharge along the way. Regardless of which technology—PHEV or EV—captures the dominant share of the market, consumers will demand access to public charging infrastructure.”

She stressed that of the market fails to deal with the upfront high sticker prices of hybrids and EVs as well as consumer anxiety about range, these vehicles will fail to achieve mass market penetration.

It will thus be interesting to see if hybrids can successfully hurdle those challenges in the months and years ahead. 

Discuss this Blog Entry 1

on Apr 10, 2012

Lets take the, now out of production, peoples car...Voltz Vagen. After the $10k that you and others give me as a rebate, I can get in it for "just" $30,000. When I take it home and plug it in, I find that I get about 2/3s the mileage advertised and I can only go 30 or 40 miles on a charge. They say, it's how you drive it! Huh? I can't use the A/C, I can't go over 55? You'll get run over at that speed... a danger on the hiway. So, suffering through the first month in a car I can't afford, my electric bill comes in...twice the amount as it was pre-Volt. Where is the dollar savings in this? Where is the energy savings in this? That's all immaterial. There are only two people out of 100,000 that can afford this white elephant anyway. I guess GMC found that out.

Ms. Wright is correct about the sticker shock. People just cannot afford the high prices of technology. I'm sure that well over 50% of the people drive gas guzzlers, not because they want to, because they cannot afford anything better. With inflation rising faster than it has in many years...it's not gonna get any better

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