Will hybrid sales follow gas prices? ~ Hybrid Car Review
Hybrid Car Review: Will hybrid sales follow gas prices?

Thursday, September 14, 2006

Will hybrid sales follow gas prices?

Source: Marketplace: Will hybrid sales follow gas prices down?

Cars like the Toyota Prius became popular while gas prices were rising. So it might seem logical to conclude that demand for hybrid cars would fall if gas prices drop.

But Anthony Pratt with JD Power Automotive Forecasting says that logic is flawed.


ANTHONY PRATT: "Vehicle manufacturers have committed to producing these hybrid electric vehicles, so regardless of short term swings in gasoline prices, they'll produce these hybrid electric vehicles."

It's an interesting theory, but I'm not sure I completely agree. While I think hybrid vehicle sales will continue to increase, I would have to say it's not a one-to-one relationship with production. While Toyota is selling as many Prius as they can build, all you have to do is look at sales of the Honda Accord Hybrid and you will know that just because they build it doesn't mean they are going to sell it.

Honda Accord Hybrid Sales:
Month-Year Honda Accord All Hybrid Vehicles
Jan-05 805 8455
Feb-05 855 10400
Mar-05 1862 16619
Apr-05 2023 20974
May-05 1314 16887
Jun-05 1080 19223
Jul-05 1376 19428
Aug-05 2336 23307
Sep-05 2352 19180
Oct-05 1266 16934
Nov-05 837 16103
Dec-05 720 18238
Jan-06 351 15867
Feb-06 783 14957
Mar-06 581 17861
Apr-06 614 21707
May-06 520 23554
Jun-06 396 23048
Jul-06 504 25626
Aug-06 499 26249

As you can see, despite being highly popular at the beginning, sales of the Accord hybrid have fallen since. And Honda has gone on record that they will be cutting production of this hybrid. But at the same time, overall hybrid sales have increased in a stepwise fashion each time a new hybrid vehicle comes on to the market (note the jump in June, 2005 when the Toyota Highlander was introduced or in May, 2006 when the Toyota Camry and Lexus GS450h came fully into the market).

Hybrid car sales do have a tendency to follow the gas price, but given consumer pessimism about gas prices and where they are headed despite the recent dip, the demand is going to stay high and it's not going away. The hybrid just has to do what the consumers expect it to do, and that is get better mileage.

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