Why Are Hybrid Sales Soft Now? They're Ugly and Expensive.

Breaking! The LA Times reports that hybrid sales have fallen off a cliff. Whereas in the summer there was a long wait for hybrids, now there’s a glut of inventory on the lots.

This, the newspaper tries to convince us, is a problem for automakers and dealers who are trying to pacify the U.S. government, who wants better miles per gallon and efficiency. The money quote from an analyst:

“The automakers are in the situation of needing to pacify politicians that are in the position to bail them out with expensive fuel-efficient cars,” said Rebecca Lindland, auto analyst with IHS Global Insight. “But shouldn’t it be more about satisfying the needs of the American consumer?”

Yes, it should be about satisfying consumers. And how do you satisfy consumers? Through choice and through saving money. And neither of those options are presently on the table for hybrid cars, but that doesn’t mean that they won’t be in the near future.

The current environment couldn’t possibly be worse for hybrid autos. The economy is tanking and gas is super cheap. For example, The Ford Fusion hybrid sells for $8,000 above its gas only counterpart. Would many people like to layout an additional $8,000 in this economy? Of course not.

Will the economy be permanently destroyed, or do we expect a rebound eventually? Will the price of gas remain low forever, or do we anticipate a lift over time? When the economy snaps back into shape, if car makers have developed hybrids at scale, the price will fall. Coupled with the increase in gas prices, sales will increase and outpace gas only cars.

Additionally, the more hybrid cars that an automaker makes, the better the chances are that people will find one that they like. As it stands right now to purchase a hybrid, either you drive off the lot with a Prius or you buy an inferior hybrid at a premium. Here’s the cars listed in the story: Chevy Tahoe hybrid, Civic hybrid, the $74,085 Cadillac Escalade hybrid and the $105,885 Lexus LS600h, these last two don’t get better than 21 mpg. If you walk into a Baskin Robbins, stare at 31 flavours of ice cream, then are told that just one of them is low-fat, and that one was egg flavored, do you opt for it, or just take on the fat?

No offence to the Prius-driving public, but it’s an ugly egg shaped car. The average car buyer isn’t going for it on looks alone. For some odd reason, years ago, it was decreed that electric/hybrid cars couldn’t look good. And since then, it’s been that way. But if we make more cars that are hybrids, the odds are that they’ll look better and people will want them.

Just because people don’t want to buy either the cheap ugly egg car or the over priced luxury hybrid automobile that doesn’t get great milage, in a depression, it doesn’t mean it’s time to throw in the towel on hybrids. Idiotic reactionary logic like that is the reason we still have cars adhearing to out dated fuel standards. Just like everything else in the economy, we just have to wait for things to improve.

And, P.S., the premium paid for a hybrid Civic or Prius or Insight, gets paid off in about 7 years. We know it’s not really our style to think of the long term, but in this case, it might be a good idea.

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