Sales of Hybrid, Electric Cars Fall, and Not Because Gas Is Cheaper
Like everybody else, auto-buying consumers follow the economic news, and the headlines don't exactly encourage extravagant spending. Which might help explain why hybrid and electric-car sales plunged 24 percent in July compared to a year earlier.
People are definitely buying smaller more fuel-efficient cars, but EVs are expensive, and they're going for the cheaper -- and increasingly fuel-efficient -- conventional alternatives. Among the winners there are the Ford Fiesta, Honda Fit and Chevy Cruze (the second-biggest selling car in July, after the Toyota Camry).
Frankly, the green car buyer has a lot of inexpensive choices today, as automakers (especially the American ones) realize that there's gold on high-mileage end of the market. As an example, nearly all of the fuel-efficient clean diesels are selling well, especially the VW Golf and Jetta TDIs. If I read this right, the Mercedes E320 diesel is up 7,033 percent from July 2010. GM's decision to sell the Cruze diesel in the U.S., not just Europe, was a stroke of genius.
MPG is MPG
Let's face it -- if two cars both get 40 mpg on the highway, why pay extra for the hybrid when the conventional alternative is much cheaper? Bragging rights for the category are fading. This is a wake-up call to companies that make electrics and hybrids: Unless you work overtime to keep them affordable (or increase the fuel economy advantage), you'll risk limited sales.
Total sales in both categories -- 17,930, for those of you playing at home -- gives them less than two percent of the market. It's statistics like these that auto lobbyists point to when they say car buyers won't pay a premium for green.
In an even bigger drop, sales of purely electric cars -- the Leaf, Volt and Smart Electric Drive -- were down 53.4 percent in July from June. Sure, most of that is supply related, but Nissan is taking a risk by raising the price of the base 2012 Leaf by $2,420 to $36,050, and the SL everyone wants to $38,100 (up $3,530). Nissan did it to add useful features (including a heater better adopted to cold weather), but now the Leaf is getting close to the Volt's $41,000. Pretty soon neither car will be constrained by supply issues, and there won't be any excuses left if sales remain low.
Price premiums cause pain
George Augustaitis, a senior automotive analyst at Mintel International, points to an interesting strategy -- erasing the price penalty for hybrids:
It's interesting that the Lincoln MKZ hybrid is being offered at the same $35,180 price as the regular car -- and it's doing some pretty good numbers.The Hyundai Sonata is another hybrid with a smart pricing strategy. The hybrid is the middle-priced Sonata, positioned between the base car and the turbo model. And it's making a serious run at the long dominance of the Toyota Prius. The Sonata is now the number two hybrid, and it's trying harder -- sales were up 193 percent in July from June. The hybrid comes in just one loaded version at $25,795, which makes it cheaper than a fully equipped Prius V.
More people would buy the Chevy Volt and Nissan Leaf if they could afford them -- there are whopping price premiums of at least $15,000 over cars like the Nissan Altima (with 32 highway mpg), a bestseller whose sales were up 17.5 percent last month from a year ago.
Today's stark marketplace choices could be temporary. Phil Gott, an auto analyst at IHS Global Insight, points out that the price advantage conventional cars enjoy today probably won't last:
As automakers strive to meet the CAFE goals on conventional vehicles, they're going to get more expensive. With battery electrics, the only thing they're going to do is get cheaper. The price difference between the two is going to diminish.While they're waiting for that to happen, automakers have some good options with hybrids and electrics. They can offer limited-content hybrids at a good price point, cut the size of battery packs to produce cheaper battery cars with 50 instead of 100-mile range, follow the Lincoln example and erase the hybrid price premium, or hybridize budget cars so that even with a higher price they're still affordable.
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Photo: Nissan