Advance-Tech Car Sales Plunge On Japan Supply WoesBy John O'Dell June 2, 2011
Sales of hybrid and plug-in electric-drive vehicles plummeted to a 16-month low in May, dragged down by real and imagined supply constraints along with increased competition from lower-priced conventionally powered fuel sippers. Volume of just 17,852 cars and trucks in the advanced technology vehicle segment was down almost 31 percent from April and the lowest monthly tally since February 2010. In contrast, sales of conventionally powered cars and trucks were down 8.3 percent from April. Despite the addition this year of the Chevrolet Volt plug-in hybrid and Nissan Leaf battery-electric cars and several new conventional hybrid cars and SUVs to the segment this year, May sales of hybrid and electric-drive vehicles were off 35.8 percent from a year earlier, lead by dramatic declines in sales of Toyota and Honda models.
That contrasts sharply with a decline of just 3.8 percent from a year earlier in May sales of conventional vehicles. The steep slump came despite slight increases in sales of conventional hybrids by Ford Motor Co., Nissan Motor, Porsche and BMW as segment leader Toyota Motor Corp. saw sales of its Toyota and Lexus hybrids drop 45.1 percent for the month while Honda Motor's hybrid sales fell 29 percent. The two Japanese automakers typically account for close to 70 percent of the U.S. hybrid market, so a big drop in sales of even a few of their leading gas-electric models has a tremendous impact.
Quake Woes Continue
In May, both were hit by real inventory shortfalls as they struggled to bring operations up to full speed in the aftermath of the power, production and transportation disruption caused by March's huge earthquake, tsunami and related nuclear reactor shutdowns in Japan. News of production slowdowns at the two companies also had the effect of persuading many shoppers seeking fuel-efficient cars to look at other brands without even checking on inventories at Toyota and Honda dealerships, said Edmunds.com analyst Ivan Drury.
Increased demand during the month for fuel efficient vehicles was unmet by hybrids due to actual and perceived hybrid inventory shortfalls and that, in turn, led buyers "to look at and find alternatives among conventional vehicles," said Edmunds.com Chief Economist Lacey Plache. This was particularly true in the case the Toyota Prius, the industry-leading hybrid. Prius sales usually account for more than half of all hybrid and electric-drive vehicle sales each month but fell to just 38.8 percent of the segment's sales in May.
That paltry performance by the Prius led Toyota's tumble as dealers sold only 6,924 of the hybrids Prius' poorest showing since February 2006. All other Toyota and Lexus hybrids were down for the month, and the year, as well. Honda fared only slightly better, with a modest bump in sales of its aging Civic Hybrid due for replacement by the redesigned 2012 model later this year - failing to offset a big dip in Insight hybrid sales. Overall, Toyota and Lexus dealers sold 8,969 hybrids in May, just over half the number sold in April and down 53 percent from May of 2010. Honda's hybrid sales, while down substantially from April, were up 24 percent from a year earlier thanks to the addition this year of the sporty CR-Z, a 37-mpg coupe that accounted for 1,557 May sales.
No Help From Plug-Ins
Activity on the plug-in electric segment remained limited with only two models presently being sold several more are due next year as the gates begin opening for an anticipated flood of battery-electric and rechargeable hybrid models through the end of the decade. General Motors reported sales of just 481 Chevrolet Volt range-extended plug-in hybrid sedans, down from 493, but the automaker had previously warned that Volt sales for May would be constrained by slow production and diversion of most of the month's cars to dealerships for use as demonstrators. Nissan reported a big up-tick in deliveries of the $32,000 all-electric Leaf hatchback as a production ramp-up in Japan finally began filling the pipeline.
Nissan dealers still working off a list of 20,000 pre-production orders - delivered 1,142 Leafs in May, making it the fifth-best seller of the month among advanced tech cars and trucks. Leaf sales were up from 573 in April and Nissan North America's Nissan Division chief Al Castignetti told reporters this week that "it's onward and upward from here" with Leaf deliveries unless an unusually hot summer in Japan causes power outages or an unforeseen parts supply problem develops. GM said late last month that it is shuttering its Volt production plant for about six weeks for retooling and expansion of the Volt assembly line and expects production to nearly quadruple when it reopens in mid-July, ending the squeeze on supplies of the $41,000 four-seat plug-in hybrid.
Increased production of advanced technology cars might not be enough to get sales back on track, though, said Edmunds economist Plache. "It's really incredibly bad luck that the Japanese earthquake and associated production disruptions occurred as gas prices were reaching their highest levels in three years," she said. "While Japanese automakers may well gain back their lost share on other vehicles, hybrids will face an even steeper climb back to previous levels, given the greater and growing competition from fuel-efficient, non-hybrid vehicles." AutoObserver reported last month that there now are more than 30 conventionally powered models in the U.S. market that deliver fuel efficiency of 30 miles per gallon or more in combined city and highway driving.
By The Numbers
Toyota, as the perennial hybrid sales leader, will have the toughest climb back. Its dealers - including Lexus sold just 8,968 hybrids in May, down from 16,327 in April and from 19,110 a year earlier. At second-place Honda, sales of 3,260 hybrids last month were down significantly from 4,584 in April but were up from 2,630 in May 2010. Ford, the third-place hybrid seller, including its Lincoln brand, charted 2,935 May sales, up from 2,858 in April but down from 3,945 a year earlier. Nissan, on the strength of the Leaf electric vehicle, sold 1,641 advanced-tech cars in May, up from 907 in April and 1,164 (all Altima hybrids) a year earlier. A sagging General Motors came in fifth with 823 conventional and pug-in hybrid sales last month, down from 888 in April and 948 a year earlier. GM's expensive dual-mode hybrid trucks and SUVs have never sold well, a problem blamed largely on their stiff price premium over conventionally powered versions of the same models.
Except for Toyota, monthly advanced-tech vehicle sales by manufacturer aren't terribly impressive and they drop into negligible territory after GM. Hyundai Motors, which is having a banner year with its new Sonata, sells a hybrid version but can't be ranked because the company refuses to divulge sales figures for the hybrid, insisting that it be considered just part of the overall Sonata lineup. That put Porsche in sixth place for May, with 114 hybrid sales, up from 107 in April, followed by Mercedes-Benz with 51 May sales, down from 61 in April. Volkswagen was next with 40 hybrid sales, down from 52 in April, and BMW finishes the list of 10 companies selling hybrids and electric-drive vehicles in the U.S. with May sales of 20, up from 13 in April. None of the final five companies was selling advanced technology cars or trucks in the U.S. a year ago.