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Hybrid Market Blip No Deterrent, Bill Ford Says

A study shows rising gasoline prices will change the mix of powerplants in today's light vehicles.

Ford Motor Co.’s commitment to hybrid technology will not be derailed by the recent dip in the market, says the auto maker’s top executive.

Today’s hybrid-electric vehicles (HEVs) are an important step in improving fuel economy, but they are not the end game, says Bill Ford, chairman and CEO of the company founded by his great-grandfather.

“Ultimately, you can hybridize any fuel,” he tells analysts and journalists in a conference call. “And if you start with that assumption, hybrids don’t lose their luster.”

A recent study by The Freedonia Group, a Cleveland-based industrial market research firm, underscores this assertion. Volatile gasoline prices assure that hybrid proliferation “will expand significantly” through 2014, the study says.

Doubts arose as the once-torrid sales pace of HEVs recently began to cool off. Incentives were used to sell the Toyota Highlander, Honda Accord and Ford Escape hybrids.

But the picture still is mostly positive, as the number of available HEVs has grown to eight from five, compared with last year. And through the first quarter, HEV sales totaled 48,685 –up 37.2% from the 35,744 deliveries recorded during the first three months of 2005, according to Ward’s data.

Related document: Ward’s U.S. Light Vehicle Hybrid Sales

Through March, sales of three HEV models were behind first-quarter 2005: the Honda Accord Hybrid, down 51.3%; Toyota Prius, down 3.3%; and the Ford Escape Hybrid, down 2.6%.

But for the ’06 model year through March, Accord Hybrid sales were nearly flat while deliveries of the Prius and Escape Hybrid were up 19% and 8.1%, respectively.

As the American Automobile Assn. pegs the average national per-gallon price ever closer to $3.00 for regular gasoline, more than $0.70 higher than this time last year, hybrids are a clear alternative –and a stepping stone, Bill Ford says.

“I don’t see us finding cheaper oil any time in the near future, nor do I see oil going to any more politically stable parts of the world,” he says.

“I think it’s very wise for this company to continue to push as hard as it can on seeking other solutions,” Bill Ford says. “Some will be shorter-term solutions like hybrids.”

Wider use of ethanol is another solution finding prominence, he adds.

“And then longer term, we’re still pushing hard on hydrogen (fuel cells). All of this is predicated on the assumption that oil is a dear resource and it’s not going to get any less dear as we go into the future. Hybrids (are) very much a part of that equation. (They’re) not the only piece of the equation, however.”

The Freedonia research echoes Bill Ford’s sentiments, adding diesel powertrains to the mix.

“There will be a significant shift in the product mix of powerplants used in light vehicles, with diesel engines and hybrid-electric powerplants beginning to take share away from spark ignition internal combustion engines,” the study says.

“Diesels and hybrid-electric technologies are forecast to power a much larger percentage of all new light vehicles in 2014. Fuel cells remain a more distant promise.”

But the study adds a cautionary note: The gas-powered internal combustion engine (ICE) will continue to dominate the market well into the next decade.

“The sparkignition ICE’s continued ability to cost-effectively meet tighter emissions standards yet provide high levels of power and drivability will ensure its position in the marketplace,” it says.

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