Editor/Reporter - CheersandGears.com
January 16, 2012
Automakers have been pushing Hybrid vehicles for the past few years as a way for owners to save gas and the environment. However, according to LMC Automotive, hybrid sales in the United States have slowed last year to 2.2% compared to 2.4% in 2010.
Mike Jackson, chief executive of auto retail chain AutoNation Inc., says that while 75% of customers that walked into his showrooms wanted to talk about hybrids, they only make 2.5% of AutoNation sales.
“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,” said Jackson.
Hybrid vehicles face two challenges: the cost of hybrids haven't come down fast enough to justify the added expense and regular internal combustion engines have become more efficient.David Champion, senior director of the Auto Test Center of Consumer Reports points out that a regular Civic gets 32 MPG combined while the Civic hybrid achieves 44 MPG combined. That extra MPG means $322 savings in fuel for a year. But with a larger price tag, the Civic hybrid takes more than six years to get the money back.
What’s more, improvements to a regular internal combustion engine can potentially improve fuel economy by 40% while costing an extra $2,000 per model by 2020. Also, putting a vehicle on a diet and doing better aerodynamics can lower consumption by up to 10% and would cost approximately $200 per car by 2020.
“The advantages of hybrids are getting harder to justify. It’s the cost differential. Consumers are rational and they understand the cost of ownership,” said Scott Corwin, vice president of consulting firm Booz & Co., New York.