Down Economy Tests Carmakers’ Commitment to Hybrids

When gas prices were in full ascent, nearly every major automaker announced big plans to increase production of hybrid gas-electric vehicles. But the cost of a gallon of gas has started to recede, and the price of a barrel of oil has dropped from nearly $150 a barrel to below $120. At the same time, the new car market has shrunk by millions of units. These factors raise questions about cash-strapped carmakers’ ability to look past the short-term economic picture and maintain their commitment to hybrids.

If auto executives look only at short-term figures, it appears that hybrids have lost their allure. Domestic sales of hybrids in July dropped 6 percent compared to last year, and year-to-date hybrid sales are down 1.6 percent compared to 2007. Even sales of the Toyota Prius, the most popular hybrid car, slid by 7 percent in July.

In the larger view, total sales of light duty vehicles dropped 13.2 percent in July, and have declined 10.5 percent during the first seven months of the year. Meanwhile, despite the downturn in Prius sales—mostly because Toyota does not have enough inventory to meet demand—the Prius was the tenth most popular passenger car in July. Sales of the Honda Civic Hybrid rose by 38 percent compared to last year. Declines in the hybrid market mostly came at the expense of SUV hybrids and luxury hybrids.

In this light, it seems that troubles in the North American auto market have more to do with a failure of automakers to produce fuel efficient vehicles than with general economic woes. While hybrids might serve as the much-needed counterweight to declining sales, success in the hybrid market will take executive resolve—and cash commitments to produce and market new models.

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  • JuanSan

    Take a $11,000 car pick one say Cobalt + full hybrid technology sell it for 15,000-16,000 and you have a HUGE hit (Oh what if there was a tax break with it say $2000?)

    Ok its not that easy but why are hybrids generally down, its because auto dealerships sell above sticker price $24,000 +
    Sometimes in economic hardship people will downsize or say buy cars that reduce their monthly payments . My question is why can’t we get hybrids under 20K? There has to be diversification in the hybrid market or were not going to the EV/Hybrid society that everyone wants!!

  • Collin Burnell

    The ONLY reason hybrid sales were down is because they did not make enough of them! Particularly the Prius. This article ‘makes light’ of that!

  • Anonymous

    Only if gas could go down to $2 GM would spent whatever it takes to get new SUV’s and Hummers on the road. Old ideas will dominate the auto industry for years to come.

  • TD

    I went looking for Honda Civic Hybrid yesterday. Good luck finding one.

    What’s up with the automakers? Are they a bunch of fools?

  • TD

    And Nissan is only offering hybrids in limited markets. Can’t buy one in Washington state.

    They are fools!

  • TommyJ

    Main reason why hybrids are down is b/c of production. But we can’t say thats the only factor. I would say to anyone out there go to a dealership and they will play games with you either they don’t have hybrids or have 1 floor model then show you the cars they want to sell to you. Another thing they will do is have 3 Civic Hybrids on lot and offer no and I mean NO deals you take it for what they ask for! Personally it turned me off

  • Stan

    Hybrid sales are down (attrib: WSJ) because they aren’t
    available. Several Florida and California dealers are paying
    “original price” for used Prius and Civics!

  • autobob

    Chevy new small car the Cruz coming in 2010. They need to kick it up a notch. They need to make a hybrid model in 2010 of the Cruz. lLets get fuel efficient with smaller cars GM. Quit putting all your hybrid eggs in $48,000 volts and $50,000 suv’s. Make a $18,000 hybrid that the masses can afford. Get 50-55 mpg and watch them fly off the shelfs.

  • steved28

    Maybe some people (like me) are simply waiting and not buying anything new. I already own a hybrid, and I’ll never settle for less. So we sit on our (paid for) Explorer and wait. Apparently until at least 2010. At $8.9B and $15B losses, I can wait longer than Ford and GM.

    We really want to trade the Explorer for a FEH, but I’m not going to hunt the nation and bend over for one.

    As far as the price of gas goes, they now have people believing anything below $4 is a bargain, so next year we do this all over again, gas goes up to $5, then creeps back to $4.50 and we think that’s cheap. OH, and there’s a hurricane heading for the gulf…

  • dangerous

    As we can see buyers really have some factors when buying cars. When they knew that gas is going down again, they prefer to guy non-hybrids because hybrids are much expensive than those that are not. Manufacturers can’t produce hybrid and sell in low cost because they produce that with all the budget even though it’s really expensive because they want to give the best for the buyers. We can’t really understand Car Techs because buyers really don’t know what they want too.

  • anon Imus

    Whatever happened to editing? This article is a mess.

  • skooldays

    Love the comments
    i see according to Webxact that Nissan are now claiming it can save at least 10% on fuel costs!
    now thats what a car really needs!

  • J-bob

    Recent report shows people driving 9.5 billion fewer miles this year than the same time last year. High gas prices, higher cost of food and energy, less jobs (hmmm.. recession anyone?) Yeah, the figures (even for hybrids) are gonna go down. Most people have had a ‘eureka’ moment. Rather than trading their gas hogs for hybrids and still spending even more money for 3-7 years, most are going back to the day when they went to school via public transit and biking, if they need a motor vehicle, motorcycle and scooter sales are going through the roof.

    States hate it because then there is less revenue to maintain streets and highways, oil companies are noticing a significant decrease in overall oil demand, and nobody is buying these cheesy auto ads for 30+ miles per gallon (yeah… highway. 20 or less in city driving where most of us need it, most of us are not that gullable).

    These are interesting times.

  • j

    Listen guys.. we have been fooled by the car industry and we will continue to take that crap judging from your comments. How crazy is this we are driving in cars based on a 130 year old technology, even a T-ford gets better millage. and the first cars were electric cars.

    What happened to common sense folks. Don’t be fooled the technology is stored in secret warehouses until the public really really gets upset.

    Stop buying cars and maintain the one you have. Believe me a well build car can easily get 15 years. The more people realize this the lower the sales of cars and the more they realize that there is a need for improvement. Let the big 3 fall on there behinds so badly that the message gets out.