Analysts Project Market Growth for Hybrid Cars

John Birchard
Washington, D.C.
June 7, 2003

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While hydrogen-powered fuel cells hold promise as the power source of the future for automobiles, they're still years away from the marketplace. Right now, the vehicle of choice for those really concerned about fuel economy and clean air is the so-called hybrid.

The hybrid combines a gasoline engine with an electric motor to produce greater fuel efficiency and reduced pollution. The big advantage of the hybrid over the "pure" electric car is that the hybrid never needs to be plugged in for a re-charge.

Toyota was first in the world with a hybrid for public sale five years ago, the Prius. Toyota's National Manager for Advanced Technology Vehicles, Ed LaRoque, sees sales on the rise.

"We're actually going to take our sales volume up to 36,000 [per year], which is a three-fold increase from 12,000 when we launched the car here in the United States in 2000," he said.

The growth in sales for Toyota is in accord with a new report from J.D. Power and Associates, the international marketing information firm.

"Over the next five years, we see the market for hybrid electric vehicles growing from 100,000[annually] today to about half a million by 2008," said Walter McManus, executive director of global forecasting for Power.

Ford Motor Company, which plans on introducing a hybrid version of its Escape sport utility vehicle later this year, is keeping a close eye on current sales.

"It's still a developing market. Rule of thumb so far has been about 10 percent of sales for a vehicle, if you compare a Prius to a Corolla or you look at a Civic," said Ford spokeswoman Sara Tatchio.

Corolla is a conventionally-powered Toyota, while Honda offers both conventional and hybrid versions of the Civic.

Even as hybrid sales move up, J.D. Power's Walter McManus says such vehicles are barely beyond the curiosity or novelty stage.

"Novelty, they still are. Even with half a million sales in 2008, we're still talking about a very small market, and other technologies have had a hundred years to be improved and to be refined."

Mr. McManus says car buyers are fearful of spending $20,000 on technology with which they're not familiar. They worry, he says, about reliability, durability and resale value. Additionally, he cites the lack of major motivation to jump into a new power source.

"With gasoline at a $1.50 to a $1.70 a gallon [3.8 liters], it really doesn't make sense for Americans to get in small cars that get 50 miles [80 kilometers] to the gallon," he said.