HYBRIDS

U.S. hybrid sales up 38% in 2007

Austin-area sales manager calls Prius 'the most popular car of my sales history.'

By Dee-Ann Durbin
ASSOCIATED PRESS
Tuesday, April 22, 2008

Kim Fenske drives a bus in Colorado, but when he's not working, he zooms around the mountains in a 2007 Toyota Prius.

Fenske, an attorney by training who has also worked as a forest ranger, was an environmentalist long before hybrid cars like the Prius hit the market. In the early 1990s, he ran unsuccessfully for the Wisconsin Legislature on a renewable energy platform.

But he recently decided to go one step further and make an environmental statement with his car.

"My decision is a very political decision. I want to get people in this country off their dependency on foreign oil," said Fenske, 48, who lives at the Copper Mountain ski resort.

Apparently, a growing number of buyers share Fenske's view. U.S. registrations of new hybrid vehicles rose 38 percent in 2007 to a record 350,289, according to data released Monday by R.L. Polk & Co., a Southfield, Mich.-based automotive marketing and research company.

Hybrids made up just 2.2 percent of the U.S. market share for the year, but purchases were growing steadily even as overall automotive sales declined 3 percent.

Lonnie Miller, director of industry analysis at Polk, said rising gas prices might be affected some buyers, but they're not the main driver of hybrid sales. He says sales probably jumped in 2007 because buyers had more options, including the new Nissan Altima, Saturn Aura and Lexus LS600h hybrid sedans and hybrid versions of the Chevrolet Tahoe, GMC Yukon and Mazda Tribute sport-utility vehicles.

"The gas price thing is a constant that is keeping consideration in their minds," Miller said.

On Monday, the national average price of a gallon of gasoline reached $3.50 for the first time; in the Austin-San Marcos area, the average price was $3.39. Crude oil also set a record for the sixth day in a row, closing above $117 a barrel.

Another important factor in hybrid sales growth is they have been on the market long enough for consumers to trust the technology, Miller said.

The Prius, the second mass-market hybrid after the Honda Insight, went on sale in the U.S. in 2000. The Prius remained the best-selling hybrid in 2007, commanding 51 percent of the hybrid market, up from 43 percent in 2006.

In the Austin area, Classic Toyota Round Rock has seen about a 40 percent increase in Prius sales in the past year and is now averaging about 27 sales per month.

"It's the most popular car of my sales history," said Tristin Ridderhoff, Internet sales manager. "We sell them as quick as they come in, and some are sold before they even get here."

Ridderhoff and other sales managers said they saw a spike in buyers after the first gas increase.

Ridderhoff said the Prius is a "high loyalty car" among customers; he had one customer trade in a recently purchased new truck for a Prius after the customer's wife traded her Camry for a Prius.

Recently at Classic, Ridderhoff said they just received 12 Prius vehicles on the lot, and by 3 p.m. customers were "fighting over" the last one.

"Most dealers won't discount that car because we have a waiting list for them," Ridderhoff said. "If you have the hottest thing on the market, why would you put it on sale cheap?"

Most buyers seem to stay within the segment they were in before they opted for a hybrid. For example, more than half of those who bought the Lexus LS600h had a previous vehicle in the luxury segment. Miller, the Polk analyst, said that's why it's important for automakers to have hybrid SUVs, even though some drivers such as Fenske argue that big hybrids don't save enough fuel.

California remained the top state for hybrid sales in 2007. Twenty-six percent of all hybrid registrations were in California, up 35 percent from 2006. Florida, New York, Texas and Washington followed.

Miller forecasts more of the same this year, despite warnings from automakers that U.S. car sales could be at their slowest pace in more than a decade because of high gas prices and the weak economy. Miller predicts hybrid sales will rise at least 30 percent.

"This segment has still outpaced what the rest of the industry has done. I can't see the hybrid category totally chilling out," Miller said.

Fenske, who monitors hybrid discussion groups on Web sites such as Edmunds.com, hopes more people will do the research and the math he did and buy a hybrid car. He figures he's saving $3,000 a year in maintenance compared with his old vehicle, plus $2,000 to $3,000 a year in fuel costs for his 20-minute commute. He says he gets about 48 miles per gallon.

Additional material from staff writer M.B. Taboada.