May 2007 Looking Ahead

Prius sales keep climbing, but who’s buying them? Conventional wisdom says that the typical Prius owner lives in a left-leaning state on one of the country’s coasts. After Toyota sold over 19,000 Priuses last March, we took a closer look. After adjusting for population, we found that the leading states for Prius purchases were Oregon, Vermont, California, and Washington (in that order). No surprise there. But a little further down the list, there were some unexpected results. Wisconsin and Iowa made the top 15, and Kansas wasn’t far behind. In fact, last March, buyers in the Midwest accounted for almost 20% of all U.S. Prius registrations.

The Prius is still far more popular in San Francisco than in Sioux City. But the March registration numbers show that the Prius is catching on in places that have not traditionally been viewed as promising hybrid markets. In March, car shoppers in Iowa were more likely to purchase a Prius than shoppers in Washington, DC, a fact that begins to dismantle some stereotypes. And even small Midwestern cities like Ames, IA (population 51,572) now boast Prius clubs.

Midwestern gas prices, which are traditionally higher in California and the West Coast, are also catching up. In the last week of May, the Midwest region saw a 41% increase compared with this week last year. That’s the largest year-over-year percentage increase for any region, according to Energy Information Administration.

The hybrid wave apparently breaks in California and washes into the heartland—as new waves of hybrid interest continue to hit the West Coast. "Gas prices bring more awareness to the Prius," said Toby Parks, sales team leader, Toyota of Berkeley. "The next huge spike in the car is going to come at $4 gallon." After a period of dealership incentives during past few months, Parks expects to begin selling Priuses over invoice again. "Consumers should expect to pay $1,000 more than if they would have bought the car two weeks ago. It’s strictly supply and demand."

The spread of hybrids into America’s heartland may fit well with GM’s hybrid plans. In May, GM announced that the redesigned 2008 Saturn Vue Greenline will offer a version with the GM-Daimler-BMW two-mode hybrid drivetrain. This will give GM a lineup of three full-hybrid SUVs (a compact and two-full-sized) that may be well received in areas like the Midwest where domestic brands remain strong. The Ford Escape Hybrid may also get a boost if hybrid sales in this region take off. In May, sales of the Ford Escape were up 10% over last year, a possible indication that buyers with preferences for domestic brands are entering the market.