Hybrid, EV sales dive

Jun 8, 2011

Sales of hybrid and plug-in electric vehicles fell to a 16-month low in May, dragged down by real and imagined supply constraints and increased competition from lower-priced gas-powered small cars, reports Edmunds’ AutoObserver.com.

May sales of hybrid and electric-drive vehicles were off 35.8% from a year earlier, led by dramatic declines in sales of Toyota and Honda models. Overall, Toyota and Lexus hybrids dropped 45.1% for the month. Honda, the second-largest producer of hybrids, saw its sales in the segment fall 29% in May.

“For those selling hybrids, it is incredibly bad luck that the Japanese earthquake and associated production disruptions occurred as gas prices were reaching their highest levels in three years,” said Edmunds.com’s chief economist, Lacey Plache. “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.”

Leading the slump was the decline in Toyota Prius sales — down 51% from the same month last year — which traditionally account for about half of the hybrid market. Low supply and higher prices have made the popular hybrid less palatable to consumers. A pricing analysis by Edmunds.com found that the effective cost of a new Prius was $2,500 more in May than just three months ago.

While fuel economy is the obvious appeal for hybrids, the challenge from gasoline-powered small cars is getting stiffer. There are already eight compact and subcompact cars that achieve at least 40 mpg, with at least two more on the way by the end of the year; there are more than 35 models including some midsize cars and SUVs as well as the compacts and subcompacts that earn a combined city/highway rating of 30 mpg.