Consumers Do Not Find Hybrids Appealing

For the last number of years, automakers have been pushing gas-electric products at auto shows across the world. However, according to researcher LMC Automotive, hybrid sales in the United States have slowed last year to 2.2 percent compared to 2.4 percent in 2010.

Mike Jackson, chief executive of auto retail chain AutoNation Inc., said that while 75 percent of customers that walked into his showrooms wanted to talk about hybrids, hybrids only make 2.5 percent of AutoNation sales. Jackson revealed, “What happens from the 75 percent consideration to the 2.5 percent commitment? They look at the price premium for the technology, which is already subsidized and discounted, and say ‘the payback period is too long; not for me.’ It’s a back-of-the envelope conversation on the part of the American consumer.”

According to Chevrolet vice president of U.S. marketing Chris Perry, the Chevy Volt gets people into the showroom but with less than 8,000 units sold last year, consumers often entered a dealer to have a look at the Volt but eventually left with something else.

The challenge hybrids face is the continuing development of the conventional internal combustion engines. David Champion, senior director of the Auto Test Center of Consumer Reports, pointed out that the basic Honda Civic reaches a 32 mpg combined city and highway mileage while the Civic hybrid achieves 44 mpg. Saving a consumer approximately $322 dollars a year in fuel, the sticker price premium will require an owner to operate the Civic hybrid more than six years to see any financial advantages.

Realizing the trend here, Ford has dropped plans for a hybrid version of the next generation Escape crossover.

What’s more, improvements to an internal combustion engine can potentially improve fuel economy by 40 percent while costing an extra $2,000 per model by 2020. Weight reduction and better aerodynamics can lower fuel consumption by up to 10 percent and would account for costs of approximately $200 per car by 2020. Comparatively, the battery in an electric car still adds $10,000 to the price of a car at current costs in technology and remains a challenge to reduce in the near future.

Scott Corwin, vice president of consulting firm Booz & Co., New York, explained, “The advantages of hybrids are getting harder to justify. It’s the cost differential. Consumers are rational and they understand the cost of ownership.”

Despite the unpopularity, hybrids remain important to every automaker’s strategy, even if it’s just to attract prospective customers into dealerships or to showcase a company’s dedication to green technology. Ford showed off its new Fusion hybrid family sedan at the Detroit Auto Show. Toyota expands its Prius range with a Prius C, costing just $19,000 and achieving 50 mpg.

[Source: Bloomberg]