Hybrid Car Review

With 2006 almost over and 2007 coming quickly (have you finished your shopping, yet?), Edmunds.com is looking back at 2006 and forecasts big changes for the new year.

In 2006, subcompacts were up 63% compared to 2005. Also, those sales were happening quickly, with dealers selling them within 12 says of reaching the lots. Dealers average 64 days to 'turn' all vehicles.

Hybrid car sales increased 35% with the introduction of the Saturn Vue Greenline and Toyota Camry Hybrid. Compact cars increased sales 17.4%, while large trucks and SUVs dropped nearly 1 percent.

Press Release follows:

SANTA MONICA, Calif.--Edmunds.com (http://www.edmunds.com), the premier resource for automotive information, has compiled lists of the new cars and trucks most researched by the ten million Edmunds.com monthly visitors in 2006. The most-researched cars are:
Rank Make Model

1 Honda Civic
2 Honda Accord
3 Toyota Camry
4 BMW 3 Series
5 Mazda Mazda3
6 Acura TL
7 Toyota Corolla
8 Infiniti G35
9 Volkswagen Jetta
10 Toyota Yaris

The most-researched minivans, SUVs and trucks are:
Rank Make Model

1 Toyota RAV4
2 Honda CR-V
3 Honda Pilot
4 Honda Odyssey
5 Toyota Tacoma
6 Toyota Sienna
7 Toyota Highlander
8 Chevrolet Tahoe
9 Toyota FJ Cruiser
10 Toyota 4Runner

Despite many recent new product introductions, most of the vehicles on the lists were also among the most researched in 2005. Newcomers to the 2006 list are the Chevrolet Tahoe and Toyota RAV4, which were both redesigned for 2007, and the Toyota FJ Cruiser and Toyota Yaris, two new vehicles introduced this year. No longer in the top ten are the Acura MDX, Audi A4, Ford Escape and Ford F-150; however, each fell just a few spots and is in the top fifteen most-researched vehicles of 2006.

2006 Automotive Trends Spotted by Edmunds.com(a)

Gas Prices Shift Consumer Demand – Gas prices soared, reaching a national average of $3.03 per gallon for regular self-serve in August 2006, according to the American Automobile Association. As a result, many consumers researched and purchased more fuel-efficient vehicles, including subcompact vehicles, while sales of large trucks and SUVs declined. Specifically:

* Subcompact market sales increased 63% compared to 2005, thanks in part to the introductions of the Honda Fit, Nissan Versa and Toyota Yaris. On average, these three new model vehicles sold 12 days after arriving at dealerships. In contrast, the industry average “days to turn” was 64 in 2006.
* Hybrid vehicle market share increased nearly 35% compared to last year, largely due to the new hybrid tax credits and the introductions of the Saturn Vue Greenline and Toyota Camry Hybrid.
* Compact car market share increased from 15.9% in 2005 to 17.4% in 2006.
* Large trucks and SUVs each dropped nearly one percent in market share. The drop likely would have been much larger without the generous incentives automakers offered to buyers of these vehicles.

Domestics Lose Market Share – Chrysler, Ford and General Motors continue to feel the heat of import automakers, particularly Toyota. For example:

* Domestic manufacturers’ market share percentage dropped from 57.0% in 2005 to 54.6% in 2006. Import market share percentage increased from 43.0% in 2005 to 45.4%.
* All three domestic manufacturers experienced a loss of market share in 2006: Chrysler lost 5.1%; Ford declined 5.4%; and General Motors fell 6.0%.
* In 2006, Honda and Toyota achieved market share gains of 5.1% and 15.8%, respectively. Toyota sales now routinely outpace Chrysler, and for two months in 2006 Toyota sold more vehicles (including Lexus and Scion models) than the traditional number two U.S. automaker, Ford Motor Company.

Incentives Plateau – Incentive spending was relatively flat for domestic, Japanese and Korean automakers, while European automakers continued to be aggressive. Specifically:

* Average incentives for 2006 were $3,306 per domestic vehicle sold and $1,242 per Japanese vehicle sold. Average incentives for 2005 were $3,456 per domestic vehicle sold and $1,109 per Japanese vehicle sold
* In 2006, Chrysler led the domestic incentives war with average incentives of $3,750 per vehicle sold, while Ford spent $3,402 and GM spent $2,998. In 2005, GM led the pack with average incentives of $3,623 per vehicle sold, while Ford spent $3,148 and Chrysler spent $3,510.
* In 2006, Honda spent $708 per vehicle sold while Nissan spent an average of $2,386 and Toyota spent $1,046. In 2005, Honda spent $646 per vehicle sold, while Nissan spent an average of $1,769 and Toyota spent $961.
* In 2006, Korean automakers spent $1,818 per vehicle sold, up only 1.2% from $1,797 in 2005.
* In 2006, European brands spent nearly $2,730 per vehicle, up over 31% from $2,078 per vehicle in 2005. Included in that amount is incentive spending on subsidized leases, which rose over 35%.

2007 Automotive Trends Forecasted by Edmunds.com

Edmunds.com expects light vehicle sales to be flat in 2007, with sales near expected 2006 levels of 16.5 million.

“Gas prices will be a leading factor in how consumers choose what vehicles they purchase in the coming year,” said Jesse Toprak, Executive Director of Industry Analysis for Edmunds.com. “Automakers who are prepared for that trend will enjoy great success in 2007.”

Edmunds.com also expects that:

* Many new products will attract consumers to domestic showrooms. GM has already made headway with the Chevrolet Silverado and GMC Sierra, while the Buick Enclave, Chevy Malibu, Chrysler Town & Country and Ford Edge should also help keep domestic dealerships busy. However, U.S. automakers will continue to lose market share to Japanese brands and Hyundai. The Toyota Tundra, voted Edmunds.com’s Most Significant Vehicle of 2007, will take a chunk of large truck market share from the domestic automakers. This is a very profitable segment, so any loss in market share will have a disproportionately large impact financially.
* In terms of sales volume, Toyota will overtake Ford as the number two automaker in America by mid-2007.
* Sales of crossover vehicles will continue to improve as midsize and large SUV owners seek better fuel economy. More attention will be directed to this issue as the new Environmental Protection Agency (EPA) fuel economy ratings are released for all 2008 model vehicles.
* Hybrid vehicles will continue to gain mainstream interest with the release of new models such as the Chevy Tahoe, Dodge Durango, GMC Yukon, Nissan Altima and Saturn Aura Greenline. The new EPA ratings will hurt hybrid vehicles’ fuel economy figures, but consumers will be drawn to the technology regardless. Price premiums on hybrids will decrease as more models enter the marketplace and help satisfy demand.
* U.S. acceptance of diesel will expand with the introduction of Mercedes-Benz’s new BlueTec diesel technology and the new diesel Jeep Grand Cherokee.
* Leasing will continue to boom, with luxury manufacturers enjoying the largest gain. Thanks to leasing’s recent resurgence, certified pre-owned sales will increase in 2007 as a significant number of off-lease vehicles will enter the marketplace.
* More consumers will understand and reap the benefits of working with auto dealerships’ Internet departments.