U.S. Hybrid Sales Losing Traction, Despite New Entrants

Ward’s data makes clear the newer hybrids aren’t helping grow the segment. Rather – if they are living up to their sales targets – they are replacing volume lost as deliveries of older nameplates decline.

Christie Schweinsberg, Senior Editor

December 3, 2010

4 Min Read
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Despite a growing number of hybrid-vehicle nameplates available in the U.S. market this year, sales are losing their spark, Ward’s data shows.

With 15 passenger cars, up from 13 in 2009, and 12 light trucks, up from nine, hybrid buyers have ample choices if they want to go green.

Offerings range from small-and-affordable models, such as the Honda CR-Z and Insight, to the larger more-pricy Lexus LS 600h, BMW 7-Series and Cadillac Escalade.

In the mid-range segment, there are six high-volume compact and midsize hybrid cars to choose from: the Honda Civic, Chevrolet Malibu, Ford Fusion, Mercury Milan, Nissan Altima and Toyota Camry.

Yet, more seems to be less when it comes to motivating consumers, with hybrid light-vehicle sales falling 7.6% through November, to 245,387 units from 265,478 year-ago. Car deliveries dipped 4.3%, while light trucks tumbled 22%.

The data makes clear the newer hybrids aren’t helping grow the segment. Rather, if they are living up to their sales targets, they are replacing volume lost as deliveries of older nameplates decline.

Honda, for example, sold 4,373 all-new ’11 CR-Z hybrid sport coupes through November. In the same period, Civic Hybrid deliveries plunged 56.1%, marking an 8,000-unit decline from year-ago. Camry Hybrid sales also fell 8,000 units in that timeframe, down 37.5%.

Among luxury hybrids, Lexus HS 250h and Mercedes-Benz S-Class, both new in 2009, added volume to the segment with triple-digit percentage increases compared with like-2009. But with just 9,542 units sold, the HS is underperforming Lexus’ expected 20,000-unit annual rate.

Ford Fusion Hybrid gained most segment share through November.

There was even less interest in the Lexus GS, which accounted for 275 deliveries, and the LS with 112. Sales of the LS 600h, alone, plummeted 53.9%.

Mercedes moved 913 hybrid S-Class models in the first 11 months, while BMW paled in comparison, selling a mere 80 hybrid 7-Series sedans.

Hybrid cars taking the biggest overall plunge through November included the discontinued Chevy Malibu, down 90.1%, and Saturn Aura, off 86.4%.

But there also were bright spots. The Fusion Hybrid saw sales climb 38.1% in the period, pushing its market segment to 7.9%, from 5.3% year-ago, for the largest gain of any U.S. hybrid model through November.

Meanwhile, the Toyota Prius continued to account for half of all U.S. hybrid sales, despite a 2% sales decline in the period.

On the light-truck side, the new-for- ’10 BMW X6 and Mercedes M-Class delivered 233 and 765 units, respectively, through November.

But the individual gains could not overcome the 10,663-unit loss among other hybrid nameplates through November.

These include the 49%-plus sales declines in the discontinued Mercury Mariner and Saturn Vue cross/utility vehicles, as well as the 35.7% drop in Toyota Highlander deliveries and 56.4% falloff for the Chevy Tahoe.

What’s driving the decline? Relatively low fuel prices are a factor, as hybrid sales for the last 10 years have ebbed in sync.

When regular unleaded gasoline hit $4 per gallon in 2008, deliveries of fuel-efficient cars skyrocketed. But as prices fell later that year, hybrid sales came in 10.5% below 2007’s 352,862 units, Ward’s data shows.

Indeed, recent media reports suggest hybrid sales may have been artificially inflated during the past two years thanks to the U.S. government. Bloomberg says the federal government has purchased one of every four GM and Ford hybrids sold since President Obama took office in January 2009.

Despite the disappointing 2010 sales figures, auto makers aren’t cooling on hybrids, with a slew of new or revised models set to launch soon.

Hybrid versions of the Hyundai Sonata and Kia Optima sedans are due in December and January, respectively. Also coming next year is a hybrid version of the Infiniti M luxury sedan and the CT 200h 5-door, Lexus’ first compact premium car and its lowest-priced model.

Next-generation versions of the Civic Hybrid and Camry Hybrid should arrive in 2011, and Ford’s Escape Hybrid also is due for a revision.

With just one month left in 2010, hybrid sales could end on a high note, if year-end incentive programs appeal to buyers.

December “will be the month to buy a Prius,” as Toyota has an oversupply in some markets, notably Southern California, Bob Carter, group vice president and general manager-Toyota, says during a sales call this week.

Toyota’s U.S. sales arm absorbed production originally slated for the Japan, as the discontinuance of hybrid incentives in the country sunk demand. “Our national program will be 2.9% financing and a very attractive lease,” Carter says. “It’ll be the most aggressive (Prius) marketing we’ve had.”

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