September 2008 Dashboard: Recession Catches Up with Hybrids

"Top 5 global hybrid markets" based on vehicle registrations CYTD June 2008.

and "Top 5 US hybrid markets" based on vehicle registrations CYTD July 2008.

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In September, auto sales continued their grim downward trend. Overall, the car market shrank by 27 percent relative to last year. Hybrids fared better, falling just 9 percent from September 2007 levels, but the message was clear—tight credit, reluctant consumers, and an economy plunging into recession have begun to affect all types of vehicles, hybrids included. Our question—from January of this year—if hybrids are “recession proof” is now answered.

Demand remained strong last month for the Toyota Prius, but demand slowed for many models, leading nearly every hybrid nameplate to show a sales decline. The shortage of popular Toyota models, coupled with slow sales for other hybrids, means that this year’s total hybrid sales for 2008 are likely to remain flat or even slightly fall below last year’s levels.

Another bad sign for hybrids is falling oil prices. In September, crude fell far below the $145 per barrel peak reached this past July. Gas prices are already trending downward, averaging roughly $3.60 at the end of September, and falling another 15 cents per gallon in the first week of October. While cheaper gasoline is welcomed by most American drivers, the reality is that lower gas prices translate into less consumer interest in hybrid vehicles. If the economy worsens, we can expect to see further declines in the cost of crude, and continued moderation in gas prices.

There are many looming unanswered questions: What happened to the Prius waiting lists? What about all those people wanting a Ford Escape Hybrid but Ford couldn't supply them because of battery shortages? Did folks on waiting lists back out?

And what does the recession mean for future hybrids? Will the 2010 Honda Insight—hitting showrooms at $19,000 in April—have trouble reaching 100,000 sales next year, as Honda is targeting? Will Toyota still continue to march toward 1 million global hybrid sales per year? And what does the recession mean for more expensive models including the Chevrolet Volt, expected in late 2010 at close to $40,000?

Despite the bad news in September, long-time hybrid stalwarts Toyota and Honda are unlikely to slow down hybrid plans. They operated hybrid programs for years before the rest of the market saw the writing on the wall—and before hybrid profits were attainable. Could the economic downturn be the respite needed by the hybrid leaders, and others, to catch up on supply of models (and essential battery production)? Let’s not forget that new stricter fuel economy and carbon standards in the US and Europe will put pressure on global automakers to introduce hybrid technology. In this respect, late 2008 and early 2009 could be a fallow period before another big growth spurt in the hybrid market.

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 2008 volumes based on sales-to-date.

Hybrids sold in the U.S. (September 2008): 20,836

U.S. hybrid sales for September 2008 by manufacturer and model

U.S. hybrid market historical sales (1999 - 2007 with 2008 forecast)

Regional Data