Peak hybrid?

Written by erik


A couple of months ago I wrote that hybrid car sales were holding up relatively well in the face of the economic downturn. My theory was that though saving money on gas was great, it couldn’t account for the whole disparity in sales decline — there had to be a core of hybrid buyers whose primary motivation continued to be lowering their carbon footprints.

However, the latest data are challenging that theory. It turns out that November 2008 sales for hybrids were down over 50% from November of 2007, compared to an overall light duty sales decline of 36.7% (from Green Car Congress). What’s going on?

The most obvious explanation is that gas prices have plummeted below $2.00 per gallon, eliminating a huge portion of the argument that paying a premium for a hybrid car now will pay back in gas money savings over the next few years. I hate to think that’s what is going on (are we that short-sighted?) but a quick glance makes that case.

However, the folks at Hybrid Car Review also made the point that November 2007 sales for the Toyota Prius were very high, making it a tough year over year comparison. I looked at this from a slightly different angle — I think this chart from Green Car Congress makes the case for hybrids overall:

What this shows is that hybrids represented almost 3% of US new vehicle sales in November 2007, way up from the sub-2% figures seen in September and October last year, and the roughly 2.2% of December 2007. This past month, in November 2008, they clocked in at 2.2% of all sales, way down from November 2007, as noted – but the chart makes clear that since July of this year hybrids have consistently represented a higher percentage of new vehicle sales than they did in 2007. From that point of view November looks like the exception, not the rule.
so here’s my prediction (you can check back and see whether I’m right in January): I predict that hybrids will be back on trend in December 2008, selling at or above the 2.2% share they notched in December 2007. One data point does not make a trend, as they say.

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  1. Kurt Schoeneman

    This is a reasonable analysis. Americans, often, have a disappointingly short term perspective, but I think the hybrid trend is well rooted and will grow in spite of lower fuel prices.
    Meanwhile, this is a good time to get your hybrid. They are being discounted fairly heavily.

  2. Rob Mathis

    Yeah, I certainly hope that you’re right and this doesn’t become a trend. Another thing to consider is the fact that most experts are saying not to expect these cheap-o gas prices to continue indefinitely…there’s already speculation that costs could climb back into the $3+ range during Q1 of 2009 (I’m not totally clear what these are based on, but prices certainly don’t have anywhere to go but up at this point).
    And I hate to say it but I think Americans have been looking for an excuse to get back into buying the gas-guzzling national favorites. They need to feel FORCED to buy hybrids and B-class cars: the data everywhere suggests that people don’t see hybrids as “fun” — ie, the polls at — but SUV’s are a diff story. I’m glad to see clean diesels gaining more exposure, since they could change misconceptions about environmental vehicles, but I feel like most folks are looking at their own pocketbooks — and wants — rather than the big picture.

  3. Tom Harrison

    The analysis is right to separate out the new crop of hybrids that don’t get great mileage (Lexus, Escalade).
    But when the Civic and Prius were the only game in town, my recollection was that demand was strongly correlated with gas prices.
    And so it is again, with the added bonus of having a financial crisis and tight credit (hybrids are more expensive than their alternatives, initially).
    So from a purely financial perspective, American car buyers are simply responding correctly to price signals.
    And this is why we need some means of accounting for the fully-burdended cost of a product. Whether you favor a gas tax, cap-and-trade, gasoline price floors, congestion pricing (or all of the above), the most obvious way to make drivers switch is by making it become the correct economic choice.
    Now that we have some price fluctuations, at least we know that gas is not totally inelastic — when it was $4.50 a gallon, people chose more efficient cars. Perhaps $4.50 a gallon is a better price for gas?

  4. Dave

    I’m surprised no one has mentioned another good reason for the “downturn” (it’s not really a downturn IMO – while the gross numbers are down, hybrids as a percentage of the market have been consistently over 2% for 2008.
    The 2010 Prius, Insight and Fusion are all due out in the next few months and all will be significant improvements over their current models or competition.
    The Prius is rumoured to improve fuel economy another 5-10% while also improving acceleration and being more fun to drive.
    The Insight will likely post fuel economy numbers similar to the current Prius, but it will be priced significantly below the Prius and is rumoured to have a starting price below $19k – by far the least expensive hybrid on the market.
    The Fusion will beat the Camry Hybrid significantly in fuel economy (10-20% less fuel) while otherwise being similar in function.
    Anyone in the market for either a current Prius, Civic Hybrid or Camry Hybrid would be prudent to wait and see how the 2010 models fair, especially now since the economic cost of carbon emissions is very low.

  5. Ray-ray

    When gas goes down to $1.00 a gallon GM will have a field day. Yes we are that short sighted. Nobody makes a move until they get hit in the pocketbook. I predict gas will be $6.00 a gallon within the next 35 years. GM will roll out its 41 mpg car. Too little to late and begging for more tax payers money.

  6. Jackie

    I do wonder how the potential auto manufacturers “bailout” might affect things. If I were in Congress, I would want to see more realistically green new models coming out of Detroit. Perhaps, as has been noted, it is just too little, too late.

  7. Jay

    For folks that have any foresight at all, this is a great time to buy a fuel-efficient hybrid. Gas prices will go back up, even if the economy doesn’t pick up very quickly. OPEC will see to it.
    For the truly adventurous, it’s also neat that lithium-ion upgrades are available for the Toyota Prius. I get 100MPG on the way to work and 50MPG on the way home (my commute is nearly twice the battery’s range and I can’t currently charge up at work).

  8. Ray-ray

    75 MPG average? Not bad, unless you drive what I drive. Depending on the distance I drive my car can and did get 214 MPG. Yea, I know its not for everybody but its way cleaner than a Hybrid because its carbon neutral It runs on something that someone else chucked in the dumpster. No Electro magnetic frequencies blasting you and that kid in the back seat to death. No dirty mining and moving a product across the world.