Owners Not Loyal to HEVs

Special Coverage

North American Int’l Auto Show

DETROIT – When Lonnie Miller asks how many hybrid-electric vehicle owners are in a room of about 300 people here, three hands go up.

“Well, not many,” says Miller, R.L. Polk & Co.’s director-industry analysis.

The Motor City, with plenty of fullsize SUVs and pickup trucks still on its roadways, apparently hasn’t quite warmed up to HEVs that combine gasoline internal combustion with rechargeable electrical energy for better fuel economy.

HEVs account for 2.5% of U.S. vehicle sales. If the Detroit audience is average, about eight people would have been hand raisers, Miller tells Ward’s.

“They were below the market average,” he says of the few hybrid owners at a “Smart Vehicle Choices” presentation put on by Inforum, a women’s business group.

The event is held in conjunction with the North American International Auto Show, where, ironically, auto makers spent much time touting electric cars of the future.

Despite the attention HEVs have garnered in the last decade, sales remain modest. National Automobile Dealers Assn. Chief Economist Paul Taylor calls it “a specialized market.” Adds Miller: “It’s still a small piece of the pie.”

Lonnie Miller on one hand counts number of HEV owners in room.

Of the 13.19 million vehicles sold in the U.S. last year, 315,000 were hybrids. That’s short of the 350,000 deliveries Polk had predicted, based on segment growth since the trailblazing Toyota Prius first went on sale in 1997.

Still, Polk predicts HEV North American market share will jump from 2.8% last year to 5.3% in 2012.

“I don’t see the foot coming off the pedal,” Miller says of HEV market increases. “We’re in this new mindset. There is a much greater sensitivity to all things ‘green.’”

Yet, higher-priced HEVs can scare off some consumers, especially in a tough economy. “Because of the $2,000 to $6,000 premium, dealers have seen canceled orders, the result of tightening personal spending,” Miller says.

Twenty HEV models now are available, contributing to fickleness among owners. “We have not seen dramatic increases in terms of loyalty to a brand,” Miller says.

Less than one in five hybrid owners buy the same model again.

Many of them don’t buy another hybrid at all. Only 28.7% did in the third quarter of 2008, compared with 39.5% in first-quarter 2007, according to Polk data.

Still, owners who stick with the segment are an enthusiastic bunch, Miller says. “There are hybrid groups and lots of websites dedicated to hybrid ownership.”

Moreover, hybrids give auto makers a “halo effect,” he says. The Prius has done that particularly well for the Toyota brand, going so far as to create something of a public misperception that all Toyotas are fuel efficient.

At the Detroit auto show, Toyota’s luxury division introduced a new dedicated HEV, the Lexus HS 250h. The double use of “h” (for hybrid) in the model name seems like a redundant attempt to hype an upscale HEV, says one showgoer.

“They should have named it the ‘Lexus HS 250h by Lexus,’” he quips.

Other new forms of fuel-saving powertrain technology are giving HEVs a run for their money. For instance, Ford Motor Co. has big plans for its EcoBoost system.

EcoBoost uses gasoline turbocharged direct-injection technology for 20% better fuel economy and 15% fewer carbon emissions without marring performance, says Sue Cischke, Ford’s group vice president-sustainability, environment and safety engineering.

“People ask, ‘Why aren’t you talking more about the sexy stuff, like hybrids?’ she says. “But EcoBoost will achieve significant fuel economy in an affordable way for millions of vehicles in the next decade.”

Nevertheless, Cischke sees the industry nudging toward electric cars, as evidenced by the auto show emphasis on such vehicles. “Electric is the direction we’re headed, but there are a lot of things to work out,” she says.

That includes creating sufficient electrical-grid networks in communities, so that “if everyone plugs their electric cars in at the same time, it won’t crash the system,” she says.

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