Hybrid car sales fell for the third consecutive year, dropping nearly 6 percent in a year when overall vehicle sales jumped by 11 percent. That harsh reality could give ammunition to hybrid critics who argue that gas-electric vehicles were never viable, or that they only serve as a bridge to more robust vehicle electrification such as electric cars. But a deeper analysis reveals why hybrid car losses probably leveled off in 2010, and sales are poised for growth in the coming years.

Hyundai Sonata Hybrid

Strong hybrid sales in December meant growth among the most popular gas-electric models. New hybrids in 2011, like the Hyundai Sonata Hybrid, could mean the first year of expanding hybrid sales since 2007.

First, for most of the year, a down economy and low gas prices acted as a double whammy against hybrids. On top of that, Toyota—the biggest hybrid seller and the brand most associated with hybrids—suffered serious blows to its reputation for quality and reliable technology. In spring 2010, the Toyota Prius was directly implicated in these attacks. And yet, when December brought the first glimmers of good economic news and roughly a 30 percent increase in gas prices, hybrid sales jumped by 36 percent compared to the previous month. Sales of the Prius jumped by 50 percent—posting the highest numbers for the entire year.

Monthly gains for the Honda Insight, Lexus RX 400h, Ford Fusion Hybrid, and Lexus 250h similarly allowed these models to end the year well ahead of last year. These hybrids selling more than 10,000 units for the year form a bloc that stands separate from low selling that seem like experiments from half-hearted automakers. For the hybrid market to grow in 2011, carmakers need to produce products that are great cars first and foremost, regardless of the technology.

And that’s what appears to be happening. The Hyundai Sonata Hybrid, Kia Optima Hybrid, Lexus CT 200h, Infiniti M35 Hybrid and upcoming models from Toyota and Ford all promise to add market share for hybrids in the next year. In a single move, Toyota’s introduction of an entire line of Prius models—and its renewed commitment to the technology as a practical and affordable efficiency strategy—will elevate hybrids to a new level. In addition, Volkswagen is also just around from delivering on promises to introduce high-volume hybrids. General Motors, regardless of what it calls its mild hybrid technology, will also add to the mix. (And we’re not talking about the dozen or more plug-in hybrids expected in the next three years.)

The decision to hybridize is a direct result of higher fuel efficiency mandates. These laws will push carmakers to sell gas-electric cars in higher numbers in 2011—and to a much greater degree in 2012 when the next wave of CAFE kicks in. Forecasters predict the number of conventional hybrids to rise to 40 or 50 models in the next three years—doubling adoption to perhaps six or seven percent of the new market (even as pure electric cars are fighting for a single percentage point at the same time).

December 2010 Hybrid Car Sales Numbers

Hybrids sold in the US (December 2010): 28,592
Hybrid Take-Rate: 2.50%

US hybrid sales for December 2010

Model Units vs. last month vs. December 2009 CYTD vs. CYTD 2009
Toyota Prius 15,639 53.0% 32.8% 140,928 0.9%
Honda Insight 1,637 6.6% -0.1% 20,962 1.9%
Lexus RX450h 1,535 18.7% -3.9% 15,113 4.5%
Ford Fusion 1,488 6.6% -4.4% 20,816 33.8%
Toyota Camry 1,231 25.2% -18.6% 14,587 -36.2%
Lexus HS 250h 1,121 42.3% -43.4% 10,663 59.2%
Toy. Highlander 949 31.4% -7.8% 7,456 -32.7%
Honda Civic 906 48.0% 92.4% 7,336 -51.5%
Ford Escape 877 14.8% -15.3% 11,182 -24.4%
Honda CR-Z 876 -14.5% n/a 5,249 n/a
Altima 612 41.0% 27.3% 6,710 -28.3%
Linc. MKZ Hybrid 424 8.2% n/a 1,192 n/a
Mercury Milan 281 47.9% 116.2% 1,416 -3.5%
Porsche Cayenne 206 53.7% n/a 344 n/a
Cad. Escalade 131 65.8% -25.1% 1,210 -42.6%
Chevy Tahoe 125 81.2% -60.8% 1,426 -56.8%
GMC Yukon 121 86.2% -32.8% 1,221 -32.7%
Chevy Silverado 114 200.0% 1.8% 1,871 89.8%
Mercury Mariner 95 90.0% -21.5% 890 -47.4%
Mazda Tribute 48 4.3% 9.1% 655 -34.0%
GMC Sierra 44 -25.4% -69.7% 522 -11.5%
Mercedes S400 42 7.7% 88.0% 955 121.1%
Lexus GS450h 30 66.7% -44.4% 305 -35.0%
BMW Hybrid 7 25 212.5% n/a 101 n/a
Lexus LS600hL 17 30.8% 13.3% 129 -50.0%
BMW X6 6 -33.3% -88.0% 248 396.0%
Chevy Malibu 5 -28.6% -96.2% 405 -90.3%
Saturn Aura 5 n/a -96.9% 55 -89.6%
Mercedes ML450 1 n/a -98.6 766 723.7%
Saturn Vue 1 n/a -99.5% 50 -98.1%
All hybrids 28,592 36.2% 12.7% 274,763 -5.8%
All vehicles 1,114,739 31.1% 11.1% 11,588,783 11.1%

December 2010 Plug-in Electric Car Sales Numbers

Plug-in cars sold in the US (December 2010): 345
Hybrid Take-Rate: 0.03%

US plug-in electric sales for December 2010

Model Units vs. last month vs. December 2009 CYTD vs. CYTD 2009
Chevrolet Volt 326 n/a n/a 326 n/a
Nissan LEAF 19 n/a n/a 19 n/a
All plug-in cars 345 n/a n/a 345 n/a
All vehicles 1,114,739 31.1% 11.1% 11,588,783 11.1%

December 2010 Clean Diesel Car Sales Numbers

Clean Diesels sold in the US (December 2010): 8,311
Diesel Take-Rate: 0.73%

US clean diesel sales for December 2010

Model Units vs. last month vs. December 2009 CYTD vs. CYTD 2009
VW Jetta 4,239 19.6% 10.0% 44,621 12.9%
BMW X5 802 4.2% -28.8% 7,925 73.0%
Volkswagen Golf 744 67.2% 159.2% 5,781 843.1%
Audi Q7 476 4.2% 63.6% 3,466 65.5%
BMW 335d 425 18.7% 16.1% 3,802 129.6%
Mercedes ML320 412 89.0% 111.3% 2,766 -8.8%
Mercedes E320 316 11.3% 2533.3% 938 -22.6%
Mercedes GL320 315 -13.0% 28.6% 3,501 36.3%
Audi A3 262 -51.4% -13.2% 3,475 609.2
Jeep Cherokee 255 15.9% 211.0% 1,692 68.0%
VW Touareg 38 -19.1% -84.0% 1,441 27.0%
Mercedes R320 27 200.0% 353 2.6%
All clean diesels 8,311 14.4% 18.6% 79,761 36.9%
All vehicles 1,114,739 31.1% 11.1% 11,588,783 11.1%