Plummeting Prius Leads April Hybrid Sales Drop

By John O'Dell May 6, 2011

Plummeting Prius.jpg

Conventional wisdom would seem to dictate that ever-increasing gasoline prices would be paired with ever-increasing sales of the most efficient hybrids and electric-drive vehicles, but the paths diverged last month as April hybrid sales slipped and gas prices soared. Overall, sales of advanced-tech vehicles for the month plummeted 26 percent from March, while sales of conventionally powered passenger vehicles fell just 7 percent. Compared to April 2010, hybrid and EV sales were up 10 percent but still lagged well behind a conventional passenger vehicle market that saw sales rise 18 percent from a year earlier.

The numbers are skewed, though, by the poor performance of the industry's leading hybrid. Sales of other advanced tech cars and CUVs were generally flat, thanks to the introduction this year of several new models that filled sales troughs left by declining sales of older models, but sales of the Toyota Prius plummeted. Yes, that rumbling sound you heard last month was the thundering footfalls of customers running away from the Prius displays at Toyota dealerships across the land. Consumers apparently stayed away because they thought the car would be in short supply in the wake of Toyota's announced production cutbacks following the March 24 earthquake and tsunami in Japan.

050411 Hybrid Sales and Market Share - AO.jpgIn truth, inventories were higher than consumers thought – there were shortages of some trim levels and option packages, but the month ended with unsold cars at most dealerships, as sales of the Prius fell 33 percent.  And because the Prius typically accounts for more than half of all sales in the advanced technology segment, that's a big hit. It didn't help that dealers selling fuel efficient cars – including the 50 mpg Prius - firmed up pricing as demand rose along with the cost of gas: hybrids already cost more than their conventional counterparts and the technology premium increases as sales, special interest rate deals and cash incentives wither.

"Perception often doesn't match reality," said CEO Jeremy Anwyl. While the Toyota example is an extreme case, Anwyl said he expects to see more instances of sales of fuel-efficient models falling while fuel prices rise as automakers seeking to balance inventories and cut costs pull back on marketing support at the same time consumers, perceiving shortages even when none exist, reduce demand.

MPG Still Valued
One car that did see sales suffer because of production constraints tied to the Japanese disasters was the Lexus CT 200h, the newest Lexus hybrid. The sporty hatchback was launched with booming sales in March only to see volume plunge by 60% in April, to 875 cars sold from 2,199 sales the month before.

But weak performance in the hybrid and EV segment shouldn't be taken as a sign that consumers are eschewing fuel economy, said Jessica Caldwell, director of industry analysis. There are enough new, highly efficient conventional models in the compact market now – led by models such as the 2011 Chevrolet Cruze, Hyundai Elantra and Ford Focus  - that consumers seeking to cut their monthly fuel costs can do so without footing the extra expense of a hybrid or electric-drive powertrain, she said.

The market shouldn't see a significant fall off in sales of hybrids and electric-drive vehicles, though, said analyst Ivan Drury. Anomalies such as the Prius fall-off could continue into the summer because of well-publicized production difficulties stemming from the Japanese natural disaster, but with gasoline approaching $4 a gallon, “we will see hybrid sales rise again," Drury said.

Indeed, despite the overall weakness of the advanced-tech market, Nissan's Leaf battery-electric hatchback and Honda's CR-Z sporty hybrid both posted nice gains for the month. It's difficult, though, to put cars like the Leaf and GM's Chevrolet Volt extended-range plug-in hybrid in the same sales bucket as hybrids – both are still in early stages of introduction and neither automaker has ramped up production to full speed. The cars sold since both models were introduced in the U.S. in December have actually been deliveries of cars that were pre-ordered, and both Nissan and Chevrolet say they have sufficient orders to take care of their first full year of production.

Nissan reported deliveries of 573 Leafs in April, the biggest month so far and an increase from 298 in March. Chevrolet reported deliveries of 493 Volts, down from 608 in March as some production has started being diverted to dealerships that have been clamoring for demonstrator vehicles. Chevrolet said this week that May delivers of the Volt also would be low because of the need to continue producing dealership demonstrator models.

050411 Hybrid Sales Share - AO.jpgBMW
Germany's premier luxury-performance brand, BMW, sold just 13 hybrids in April. The total was unchanged from March, but the mix shifted with the ActiveHybrid7 sedan accounting for 8 sales last month versus 10 in March and the ActiveHybrid X6 CUV accounting for 5 sales, up from 3 in March.  Both models are new this year.

With the demise of its Mercury brand last year, Ford is left with just three hybrids in its lineup – although it has several more coming next year along with its first all-electric passenger car, the 2012 Ford Focus EV. For April, the company's dealers sold 2,858 gas-electric models including 1,070 Escape Hybrid CUVs, 1,285 Fusion Hybrid sedans and 503 Lincoln MKZ Hybrid sedans. That compares to a March total of 3,276 – 1,195 Escape Hybrids, 1,466 Fusion Hybrids and 615 Lincoln MKZ Hybrids.

Although it has a large portfolio of advanced-technology cars and trucks, GM doesn't sell many. Its dual-mode hybrid system, which gives big trucks like the Silverado full size pickup and the Tahoe SUV a nice boost in fuel economy simply cost too much to attract many buyers. For April, GM dealers sold 103 Chevrolet Silverado 1500 Hybrid pickups, versus 94 in March; 16 GMC Sierra 1500 Hybrid pickups, versus 26; 117 Cadillac Escalade Hybrid SUVs versus 127; 63 Tahoe Hybrid SUVs, down from 70 in March; 96 GMC Yukon Hybrid SUVs, up from 81, and 493 Volt EVs, down from 608.

Even with a couple of fairly new sporty hybrids in its portfolio, Honda wasn't able to offset the continued slump in sales of its aging mainstream model, the Civic Hybrid sedan, which will be replaced later this year with an all new 2012 model. Honda's 4,584 hybrid sales for April made it the second largest seller of advanced-tech cars and trucks behind Toyota, but represented a nearly 7 percent decline from 4,908 sales in March. Its volume model was the two-seat Insight, with 2,644 dales versus 2,782 in March, followed by the CR-Z sport hybrid with 1,819 sales versus 1,685. The Civic Hybrid brought up the rear with a dismal 121 sales, down from 441 a month earlier.

When it came to the U.S. in the 1980s, Hyundai had only one model to sell. Now it's got a full lineup – except for pickups – but has only just introduced its first hybrid, the mid-size Sonata hybrid sedan. Unfortunately, the company doesn’t believe in reporting hybrid model sales separately, so no sales data is available to track how it is doing. Overall, however, the Sonata  - conventional, turbo and hybrid models combined - did quite well with 21,738 sales for the month representing a 17 percent gain and making it the fourth-best-selling midsize sedan in the market behind the Toyota Camry, Honda Accord and Chevrolet Malibu.

Another big German maker with a small advanced-tech portfolio, Mercedes-Benz reported the first sale of its B-Class hydrogen fuel-cell electric car in April – part of a small test fleet it is fielding in the U.S. The automaker also sold 54 S-Class hybrids, up from 49 in March, and 6 M-Class Hybrid CUVs, down from 8 a month earlier.

Its first 50-state hybrid, the Infiniti M, hasn't hit the market yet, so Nissan sales are hard to compare to others in the advanced-tech segment. Its dealers in the half-dozen U.S. rollout regions for the Leaf EV reported delivering 573 of the zero-emission hatchbacks during April, up from 298 in March and reflective of what the company says will be a continued increase in the pact of deliveries for the rest of the year. Nissan dealers in the seven states where it the company's Altima hybrid sedan is marketed reported sales of 344, down from 545 in March.

The sports car and performance SUV specialist sold 107 Cayenne Hybrid SUVs in the U.S. last month, down from 114 in March.

The hybrid segment's 8,700-pound gorilla continues to dominate the market despite the tremendous slump in sales of its top-selling Prius hybrid hatchback. In all, Toyota and Lexus dealers sold 16,327 hybrids – good for a 63.3 percent share of the market but down a substantial 34 percent from 24,739 in March. As noted, the Prius was the segment's big loser in April, with 12,477 sales versus 18,605 in March. Other Toyota-brand hybrids also were down;; the gas-electric Camry compact sedan off 23 percent at 1,110 sales versus 1,437 a month earlier, and the Highlander Hybrid CUV down 52 percent to 380 sales versus 797.

The Lexus side of the family had both winners and losers in its portfolio. On the plus side of the ledger, the GS 450h hybrid sedan sold 29 models, up from 24 in March, the HS 250h sedan sold 279, up from 230, and the ultra-lux LS 600h L hybrid sedan sold 10, a gain on 1 from March's 9 sales. Losers included the CT 200h hatchback, down 60 percent at 875 sales versus 2,199, and the RX 450h gas-electric CUV,  down 19 percent at 1,167 sales versus 1,438 in March.

The last of the Germans with hybrids to offer – alphabetically, not numerically – VW reported sales of 52 Touareg Hybrid SUVs, up from 44 in March.

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