Best of the Blog Notable blogs from Hybridblog.org with technical and consumer information

Hybrid Sales Stats and the State of the Market
3/17/06

Hey everyone, back from a week’s vacation in Florida (got stuck with a Chevy Malibu as a rental, alas, the fuel economy gauge maxed out at 27.3 mpg in the very flat Florida Keys), so sorry for nothing new last week.  I was doing the collection of Hybrid News stories for this week and ran across two that merited a little attention. 

First is a story from the folks at Green Car Congress that notes U.S. hybrid sales in February 2006 were up 43.8 percent from same period 2005.  Checking out the data at Wardsauto.com, it looks like this was due to stronger sales of all hybrids except the Prius and the introduction of the Mercury Mariner, Lexus 400h, and Highlander hybrids since last February.  So, to no one’s surprise, the hybrid market continues to climb significantly with no real end in sight (Besides the new technology and models on the market, sales are certainly not being hurt by the fact that, according to AAA’s recent release, gasoline prices are at their highest levels since last November 9— Tuesday’s nationwide average price of self-serve, regular unleaded gasoline at $2.363 per gallon, more than 6 cents higher than last month and more than 33 cents higher than a year ago).

On the heels of this good news story comes some slightly different news from Ford.  While the Kermit the Frog ad campaign and additional financial incentives may now be helping to turn the tide, Ford claims that the overall sales of the Escape Hybrid cooled off at the beginning of this year. Well, that’s just flatly controverted by the sales numbers.  According to Wardsauto.com, Ford sold 2,000 Escape hybrids in the first two months of 2005 and 2,034 during the same period this year (there was a dip in January, but it was more than made up for in February—due, perhaps, to Kermit’s Super Bowl reminder that it is easy being green?).

The claim that hybrids are cooling off was justified in the article by dealers who said that “the technophile crowd willing to open pocketbooks for an American-made hybrid has already been satisfied” and hybrid buyers are looking more like the average consumer, hunting for a bargain and searching for a standout automobile.  While there is no doubt that hybrid buyers are becoming more sophisticated about choices, it seems contrary to reason that as gas prices increase, hybrid sales increase, and oil security becomes even more of a hot-button issue that somehow the hybrid market is saturated.

So, it appears that the Escape hybrid may not be cooling off after all, but the real question, then, may be why the Escape has not been at hot as expected.  The Detroit News article does state that Ford built 19,000 hybrids for the North American market last year and sold 17,000, accounting for less than 10 percent of total hybrid sales in the United States.  It also noted that Ford sold only about half the hybrids it has the capacity to make in the first two months of 2006.

So what’s the problem here?  The Escape Hybrid is a solid vehicle and a nice piece of hybrid technology.  Is it that Ford chose to leap into the hybrid market with a small SUV and that is just not the prime market for hybrid consumers?  Should they have chosen a midsize or large SUV for starters, much like GM is planning to do with its “dual mode” system? That seems doubtful since the compact SUV and crossover segments are hot right now, while large SUV sales have dropped from their peak.

Or perhaps Ford should have started with the Ford Fusion/Mercury Milan sedan hybrids (that are due out in 2008) and from the get-go offered an American alternative to the Prius and Civic that had competitive gas mileage?  It’s hard to say, since SUVs have been Ford’s forte for the last decade, and they saw an opportunity to position the Escape in a market segment where they were strong.

Maybe it is just that the Escape, like the Civic, looks like a conventional vehicle and lacks some of the uniqueness and “star-power” of the Prius. Or perhaps this is just a matter of promotion, and Kermit and some additional cash back can really turn up the heat.

I still expect that the Escape Hybrid can find a growing place in the hybrid market and that Ford will build on its experience with the Escape to deliver even better hybrids in the future while reaching its target of selling 250,000 hybrids in 2010. The reasons behind the monthly changes in the hybrid market may not be crystal clear, but the lesson learned here should certainly NOT be that consumers aren’t interested in paying a premium for hybrids anymore. 

Posted by: ScottN 3/17/06

Original post and comments can be found on Hybridblog.org.