Lack of Production Hurting U.S. Hybrid-Makers

The recent rise in gas prices has intensified already high demand for hybrid gas-electric vehicles. American carmakers have been widely marketing their hybrid offerings—almost exclusively SUVs—through major print and television advertising, including Super Bowl spots. Yet, Japanese car companies continue to own more than 90 percent of the hybrid market. Yesterday’s report from National Public Radio’s Elizabeth Shogren explains why. Ford and General Motors aren’t producing nearly enough hybrids to meet demand.

The NPR report focused on the exorbitant markups that some dealers are charging for Ford Escape Hybrids. It’s not uncommon for dealers to charge a premium of $4,000 to $5,000 on an Escape Hybrid, while simultaneously offering thousands of dollars of discounts on the gas-only version of the vehicle. “Dealers across the country are jacking up the price of Escapes and other hybrid SUVS, the same way they put premiums on fancy sports cars,” reported Shogren. “Would-be hybrid buyers also tell stories of waiting months for cars they’ve ordered and giving up in frustration.”

Christian Fackrell, a manager at Jerry’s Ford in Annandale, Va., was interviewed for the story. He said, “If there was an abundance of them, I’m sure they would sell like hotcakes.” Said Deep, a Ford spokesman, told NPR that the company has no plans to increase production. Meanwhile, Nikkei News recently reported that Toyota Motor Corporation plans to increase the number of Priuses it builds by 60 percent for 2009. This translates to 450,000 vehicles, up from last year’s production number of 280,000. Ford builds approximately 20,000 Escape Hybrids every year.

Production and sales of hybrids from General Motors are even lower. The combined sales of the Saturn Vue Green Line and Saturn Aura Green Line by General Motors are commonly fewer than 30 units per month. GM’s Chevrolet division has not released sales numbers for the Chevy Tahoe hybrid since its introduction in late 2007. According to the NPR report, and stories that has been tracking since last year, very few Saturn dealerships have any hybrids.

Michael Morrissey, a Saturn spokesman, pointed to lack of battery production. “That’s one of the growing pains of new technology,” he said. “There’s only so much manufacturing capacity of hybrid batteries in the world.” Lack of domestic hybrid battery production casts doubt on the U.S. companies’ ability to ramp up production to meet demand for hybrids that is expected to rise in coming years.

The lack of planning and/or commitment to produce more hybrids will not stop Ford’s and GM’s advertising campaigns. Mark Klausen (sp?), Chevrolet spokesperson, told NPR, “The fact that we’ve got such PR for the vehicle has lifted the image of the entire company.” But he admits that you won’t find Chevrolet Tahoe hybrids in most dealership regardless of the premium you might be willing to pay.

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  • jjspawn

    I go down to my ford dealer all the time, in Manassas, VA. They always have the same number of Escape Hybrids, 2-3. I was going to get one but there is no incentive at the dealership to buy one. I mean just about every other car u can get some kind of discount on.

    Even if you are part of the multicompany plans that most american cars offer you cannot get anything off. I drive the car around for test drive and love it but i’m not paying some super premium that would kill my whole reason for getting it. I want to save money period. Not just save money on gas. I want to get the sized vehicle i want and actually get it for a decent price. Why is it so much to ask for??

    One day they will get it right, hopefully

  • James Atkins

    I think it is a marketing method. They advertise the cars you want, but can’t get for the marketed price in hopes that while you are there at the dealership you will buy something else. Is it any wonder that the US Car Manufactures are having problems and people are turning to their competition? Having just read a story that Toyota plans a significant manufacturing increase with Hybrids looks like Ford and GM will miss the boat again. The days when Ford, or GM could force you into something, because there were no other choices has past.

  • Jeff

    These Ford and GM products are green washes. They don’t intend to sell any… they are taking us for fools. My wife and I went looking recently in the SF bay area and not a single dealer had a hybrid on the lot… “oh sure we could order one, but how about this other car here?” was what we heard at the Mercury, Ford and Mazda dealers… the GM products are lite, insufficient, window dressing… If there was a standard for sticking the label ‘hybrid’ on a car they wouldn’t be allowed to wear it. ( except for their 50K SUV that gets a whopping 20mpg… hold me back)

    We looked for a few weeks and ended up getting a decent deal on a Prius. We love it… Drove to LA and back for a 4 day vacation last weekend… 3 tanks… 21 gals of regular petrol for $3.50 a gallon… comfortable… great navi system and JBL stereo… I’m getting a kick out of pulling up at gas stations…. not really caring what the price is… and buying my 6 or 7 gallons for the next 4 or 500 miles.

    Crying shame the big three failed to learn their lessons in the 70s… if the smarter car company management keeps making the right choices… Detroit will be changing the name on the building from General Motors to Toyota. I just hope they hire all our auto workers and fire all the management.

  • Tom

    GM and Ford can do what Apple did when they introduced the Nano. Apple realized they needed lots of flash memory, in short supply. So, they invested in flash suppliers, who built extra capacity, in return for giving Apple a guaranteed supply.

    GM and Ford can commit to their battery suppliers to purchase xxx units a year, or a penalty cost if they cannot take delivery of all xxx units from the battery suppliers. Further, GM and Ford can possibly even giving up front money to the battery suppliers to build more manufacturing capacity. In return, the battery manufacturer has a stable, paying customer.. GM and Ford sell more hybrids, which sell at a premium over the gas only version, promote their green image, the battery manufacturers get more business.. so.. everyone can win. This is a solvable problem.

  • GR

    It’s unfortunate what they’re doing. It’s like they’re dragging their feet to make something that consumers would really buy…if they actually made it available.

  • steved28

    This story is enough to sway even hard core loyal Ford and GM customers away from them. That last paragraph makes me furious. We got good “PR” out of the ads. What nads! They’re giving us the finger and still expect us to politely ask for more. I already wrote Ford a letter, never even got a response.

  • Anonymous

    I tried to get an escape hybrid in Denver and never heard back from a single dealer, bought a prius instead.

  • jack r

    I think they market products that aren’t available to try to make the cars look inconvienent and not available. a stunt the auto industry pulled to stop the CARB standard. This is like dejavu but with the CAFE standards.

  • Anonymous

    Somehow the Japanese don’t have the same “lack of battery production” as the US manufacturers. In fact Toyota is upping production! Hmmmmm……

  • Kendall

    I just went to our local Ford dealer tonite and asked if they had any Mariner Hybrids. Was told no, but they were ordering two and only one was spoken for. The second one was mine if I wanted it, all I have to do is let him know by middle of April what I want him to order and he will order exactly what I want. It will be available for me to pick up in July. But by the sounds of everyone one here…makes me wonder if he is just blowing smoke somewhere…lol Any comments…???

  • Richard Samuels

    July 1st 2006, my birthday, I wrecked my Honda Civic for the last time. I had wanted an Escape HEV for years and in 2003 bought my Civic when the Escape was still awaiting production. I spent a week calling all over south florida inquiring about the Escape HEV and I got all this waiting list BS. I found a dealership in Apopka FL, just north of Orlando that had about 2 dozen on the lot. Bought my vehicle with no premium and 1.9% financing. I regularly get 32 miles per gallon or better in mixed driving and can haul all of my gear around. This is the best car I’ve ever owned, and I’ll never buy a conventional combustion engine vehicle again. It’s a shame that Ford doesn’t understand that the Escape HEV could sell over 100,000 units per year. And in a few years when I need a new one I’ll likely need to buy a Toyota. The big 3 better get in gear or get in line for welfare.

  • steved28

    Richard, They (Ford) need to hear this. Consider writing a short note saying what you did in your post.

    Ford Motor Company,
    Customer Relationship Center,
    PO Box 6248, Dearborn, Michigan 48126

  • Jerome

    Tried and tried here in Des Moines for a Ford or Mariner Hybrid SUV since my wife was not crazy moving away from a mini-van. All the dealers have my business card with instructions to call as soon as they have on to test drive. Gave them a month – bought a Camry Hybrid in Sept of ’07….. still waiting on a call from Ford/Lincoln/Mercury dealer.

    It is pitiful….. the American Car Buyer does not truly care about the cost of gas (see jjspawn above)…. they want a specific type of vehicle or size or status – which means that gas prices here will continue to climb, carbon output will continue to grow and those of us with Hybrids wince less when we fill up @ the tank.

  • max savage

    Car buyers in America are just a reflection of many Americans these days…. Angry!!! Our desire for advanced technology vehicles (hybrids, plug in hybrids, diesels,) are treated in the same way that our desire for better government is treated……. We are ignored. The Japanese will come to the rescue (again) at the cost of more market share loss to American companies. You reap what you sow. Here is my suggestion… Speak with your wallet. Pledge to not buy another new vehicle until you can buy a plug in hybrid. I am sure that my next new car purchase will be another Toyota.

  • wants a plugin

    bought ’06 Escape HEV before the rush. Was good thing to do. 35-36 in town no problem. Learned to drive light footed. However, it is a FORD. Man, what they could learn about building a body that doesn’t shake, rattle and roll.

  • ex-EV1 driver

    Its happening again. The US automakers are trying to kill anything with a battery. Its just like they did with the EV1. They only offered it in CA and AZ. Only leased it. Tried to talk you out of getting one. Made it almost impossible to get.

    Then they told everyone that no one wanted them because they were only able to lease about 1200 of them. Of course, they only made about 1200 of them in the first place.

    Ford clearly has a great design with the FEH yet they refuse to mass-produce it. Refuse to move the power plant into any other kind of vehicle (Mustang, Mini-Van, Sedan, etc). Refuse to try to sell it.

    All this does is add credence to the naysayers who grumble about the “hybrid penalty”.

    We’re all watching the efforts to ensure that the electric car remains dead.

    Detroit is acting like a bunch of buggy whip salesmen that refuse to give up on their traditional business making iron engines and transmissions.

    Thank god for Tesla Motors and the other new guys trying to make a stab in the PHEV and BEV markets. Its just too bad that their approaches are going to take so long to make it into the mainstream.

  • Glenn Louderback

    good letter Jeff. Lots of truth!

  • Collin Burnell

    Hmmm. It looks like GM has a history of ‘killing’ anything that might effect their ‘core business’…

  • Powers Foss

    We bought our first Prius in 2004 when the 2nd generation was brand new. We liked it so much we bought a 2005 Prius for my wife. I currently get 50 mpg and my wife gets 45 mpg. I’m gonna get in line early to be the first one to drive off the lot with the 3rd generation lithium-ion plug-in 2010 Prius. Can’t wait to see the kind of mileage we can get in next gen Prii.

  • Joe

    In 2000 I got rid of my 1987 T-bird and bought a jetta TDI. The TDI gets 45 mpg. 6 months ago i sold my 1998 expedition with almost 150000 miles on it. I looked around but american car companies dont offer a car that gets the mpg close to what japanese car companies offer. So we bought a 2005 Prius. With two fuel effecient cars my gas bill has fallen to almost nothing. i care about the ecology but i care about my wallet more. i bet i’m not the only guy out there who has gone to foreign made cars. Ford better get a clue.

  • Mark T

    Escape Hybrids use some of Toyota’s Hybrid patents. I wonder if the licensing is ‘limited’ as to how many units Ford can produce at the KC Assembly Plant.

    That way Toyota can state they licensed the technology for the good of the public while still keeping the competition at bay.

  • KP

    You just have to look around. Tons of dealers in the DC area told me I’d never get a Hybrid Escape Then I found a dealer in Annapolis, MD that had 9 of them on the lot. I got it for significantly below MSRP (but above invoice). They weren’t fun to deal with, but I got what I wanted (although I think I could have saved a little more if I wanted to spend a few more hours on it).

    They didn’t know anything about the vehicles, and they didn’t seem to think they could go without selling it that day.

    Some of the dealers I called were incredibly rude. I find it hard to believe that US car dealers would want to turn away business.