"Top 5 global hybrid markets" based on vehicle registrations January – March 2007.

and "Top 5 US hybrid markets" based on vehicle registrations January – May 2007.

July was a tough month for Detroit. For the first time ever, foreign automobile manufacturers outsold the Detroit three (General Motors, Ford, and Chrysler). To make matters worse, the market share shift occurred in a contracting market. Nearly every manufacturer saw sales declines in July, including Toyota and Honda. Compared with July 2006, overall vehicle sales were down 12% this July. However, hybrid sales were up by 12%.

What’s driving the market share gains of foreign manufacturers? Among Toyota’s vehicles, the Prius posted the second highest growth of any model this year (the Yaris is #1). In Honda’s lineup, the Civic Hybrid has the third highest sales growth, behind the Fit and newly-redesigned CR-V. So while hybrids still only make up 2.25% of the U.S. vehicle market, hybrid models are showing some of the most impressive sales gains. This has led to an interesting trend so far in 2007. In the first seven months of this year, hybrid sales are up more than 50% while the overall car market is down by 3%. Manufacturers looking for share gains would be smart to invest in a growth segment: hybrids.

US Sales

Our information is based on hybrid sales as reported by the manufacturers. For each model, this month’s sales are shown compared to sales in the previous month and at the same time last year. We also examine hybrid market share by model and manufacturer. The historical sales graph for top-selling hybrid models shows estimated 2007 volumes based on sales-to-date.

Hybrids sold in the U.S. (July 2007): 28,895

Regional Data

Source: R. L. Polk & Co.

Curious where hybrid buyers live? We present the data in two ways. First, we list the 15 cities and states that boast the largest numbers of new hybrids on their roads within the past year. For example, residents in the New York City area put over 10,000 new hybrids on the road in 2006. Second, we adjust for population and look at hybrids per person (in states) or per household (in metro areas). This lets us include cities like Portland, OR: a city that has fewer overall vehicles (and thus fewer hybrids) but has more hybrids per capita than anywhere else.

• States with the highest hybrid sales
• States where hybrids are most popular
• Metropolitan areas with the highest hybrid sales
• Metropolitan areas where hybrids are most popular

Looking Ahead

Are there storm clouds on the horizon for hybrids? The latest research from JD Power and Associates suggests there are. In July, the automotive consultancy released its 2007 Alternative Powertrain Study, which indicated that the number of carbuyers considering a hybrid had dropped—from 57% in 2006 to 50% this year. The study also found that buyers considering hybrids were willing to pay less for a hybrid than in the past, and that consumers had tempered their expectations on hybrid fuel economy gains.

JD Power’s findings fueled a surge of pessimistic articles about the future of hybrids. But is the gloomy outlook justified? Sure, hybrid consideration has declined somewhat, but a fall from 57% to 50% is hardly major movement (by the way, what’s the margin of error on those results?) If half of all carbuyers still have a hybrid on their list, that means roughly 8 million shoppers will think about putting a hybrid in their garage this year. That seems to give hybrids lots of room for future growth.

The study’s other findings don’t seem like much cause for concern either. Carbuyers are learning more about hybrids and about the real fuel economy they deliver, which for many models is quite good (although not quite as impressive as the old EPA ratings suggested.) It’s a positive thing that hybrid shoppers are making more informed purchases: in fact, one of the goals of hybridcars.com is to help potential hybrid buyers make educated choices. But market analysts should remember that for many buyers, hybrids are about more than just the dollars and sense of fuel economy. Buying a car that makes a small contribution to resolving environmental problems or our dependence on foreign oil matters to people as well. Neither one of those factors seems to be included in the latest research results.