US hybrid sales outlook rosy, despite 2010 slide: Polk

GLOBAL automotive analyst R L Polk & Co believes hybrid car sales in the US should rebound with new model launches, more comparable pricing with conventional-engine variants and, most importantly, with rising petrol prices, which are now pushing up toward $US4 a gallon.

In a paper released recently, Polk takes a detailed look at the hybrid car market in the US, which has provided the benchmark for other countries, including Australia, when it comes to consumer experience with petrol-electric vehicles since first appearing in American showrooms in 1999.

For 10 straight years, hybrid’s share of the US retail car market increased incrementally. But in 2010, for the first time, the petrol-electric part of the equation dropped from 2.9 to 2.6 per cent (on par with its 2008 share), with Polk recording 236,000 hybrid vehicles registered to retail customers.

The company has also found that when buyers of a particular model are faced with a choice between a hybrid and conventionally-powered variant, they increasingly choose the less expensive non-hybrid version.

Last year, for example, hybrid vehicles comprised just 3.8 per cent of sales where there was a choice between a conventional and alternative powertrain – as seen with the Honda Civic, Toyota Camry and Toyota Highlander (Kluger) lines – which was down from 5.2 per cent in 2009.

From top: US-market versions of the Honda Insight, Ford Fusion hybrid and Lexus CT.

According to Polk, hybrid’s sales decline last year can be attributed to lower petrol prices and the launch of a broader range of high-mileage (40mpg-plus) conventional-engine light cars, such as the Ford Fiesta and Focus and 2011 Hyundai Elantra, which in some cases have hybrid-like consumption “without big price tags”.

As GoAuto reported last week, this trend is continuing in 2011 with significant shifts in sales towards small, fuel-efficient cars in the US – tangible signs that Americans are starting to shed the stereotype and look beyond large gas-guzzling vehicles.

Polk describes the US hybrid market as being in a state a flux as a result of these factors, and others, including the move by the US federal government and some state governments to reduce or eliminate tax credits for “conventional” petrol-electric hybrids, replacing them with credits for plug-in hybrids and fully electric vehicles, which are not only more expensive but available in more limited supplies.

The paper was published before last month’s US sales results, which reinforced the trend toward passenger cars over pick-up trucks and big SUVs as the total market climbed 18 per cent, despite stock shortages and rising fuel prices.

As GM sold more than 26,000 Cruze sedans and Ford did likewise with Fiesta/Focus combined in April, demand for the Toyota Prius dropped 4.3 per cent to 12,477 units on the back of restricted supplies and reduced incentives.

Having said that, Toyota data shows that demand for the Prius remains strong in the US, with the dedicated hybrid car up 32.8 per with more than 55,000 sold year to date.

Prius is the clear hybrid market leader in the US, with Polk recording 128,000 retail registrations last year, representing 54 per cent of the entire national retail hybrid market – a segment that contains no fewer than 34 nameplates, up from 28 in 2009.

Just as GM and Ford are attempting to limit Toyota’s hybrid market share – Ford is making progress with its Fusion Hybrid, for example – Toyota is likewise capitalising on the shift towards smaller cars in general.

Corolla, for one, is up 7.9 per cent YTD, despite a 16.5 per cent drop last month (to 24,215 units) and Toyota has recorded useful gains with other passenger cars, both within the Toyota stable and its Scion youth brand.

Figures in the US from Honda, meanwhile, show that its Civic Hybrid is down 4.8 per cent YTD, but the Insight hybrid is up 24.5 per cent YTD on the back of a record 2644 sales last month.

Polk believes hybrid vehicle sales in the US will continue to rebound, with the biggest single factor being prices at the fuel pump. It says that “if manufacturers can effectively market their alternative-fuel vehicles, they should regain market share”.

New models such as the Lexus CT200h, Toyota’s Prius V wagon and Hyundai’s Sonata Hybrid are cited as examples of new models that will give consumers more options in terms of styling and price points, while eliminating the price difference between conventional-engine and alternative-powertrain models – Polk uses GM’s 2012 Buick LaCrosse as an example of this occurring – “could be the first step in an industry-wide move to make hybrids more affordable”.

As hybrid prices come down, the hybrid buyer demographic will shift from what Polk describes as high-income earners to a broader range of people.

The company says one in four hybrid buyers earn more than $US150,000 per annum – well above the 16 per cent at that income level in the overall US light vehicle market.

Polk also says the age group that tends to buy hybrids is 55-to-74 – a bracket that buys 39.5 per cent of hybrids while representing 34.5 per cent of US retail vehicle buyers.

Among ethnic groups, hybrids are said to be most popular with Asian Americans than with Hispanics and African Americans, possibly, says Polk, because “Asian Americans tend to have higher household incomes and often gravitate toward the Asian manufacturers that are strong in hybrid vehicles”.

Polk says that while Asian buyers represent only 3.5 per cent of buyers in the overall retail light industry, they account for 6.7 per cent of hybrid purchases.

Confirming its citizens as “early adopters of new technology and forward thinking when it comes to the environment”, California remains the biggest geographical market for hybrids in the US, accounting to 24.3 per cent of all new registrations while in the overall market the state accounts for 10.1 per cent of retail sales.

Los Angeles alone accounts for 13 per cent of all hybrids sold in the US. That said, Polk data shows that the much smaller market of the District of Columbia actually has a higher penetration of hybrids, with 6.6 per cent of all retail vehicles sold in Washington DC being hybrids compared to 6.2 per cent in California.

California also has high electricity costs, which could have make plug-in hybrids and EVs cost-prohibitive for green-minded consumers in the state.

According to Polk, Washington and Oregon round out the list of states in which consumers are at least twice as likely to buy a hybrid vehicle as the average US retail consumer.