Hybrid sales expected to grow as recession ends, fuel prices increase

Dec 2, 2009

Consumers continue to drive the sales of hybrid vehicles in the U.S. and global markets, despite a fall-off, as gasoline prices dropped during the recession of the past year and a half. This, according to a report from ABI Research, Oyster Bay, N.Y.

During the past decade, the benefits and limitations of hybrid vehicle ownership have become much better understood, which has led to the rapid broadening of the market. However, the economic meltdown of recent years has hurt the global auto industry, and the consumer hybrid sector has fared no better; sales of consumer hybrid vehicles in the United States and Europe will show little growth in 2009.

Nevertheless, several factors will help increase the consumer hybrid vehicle market in the coming years, according to the ABI Research study, “Consumer Hybrid Vehicles: Series, Parallel, Mild Full Parallel and Assist Hybrid Cars.” These factors include the anticipated post-recession rise in fuel prices, continuing advances in hybrid power trains and battery technology, and the development of home-grown battery suppliers for U.S. automakers.

More than 550,000 consumer hybrid vehicles were sold worldwide in 2008, barely a drop compared to global consumer car sales exceeding 60 million that year. ABI Research foresees the market for consumer hybrids during the forecast period to surpass 1.9 million units by the time 2013 rolls around.

Says Larry Fisher, research director of ABI Research’s NextGen research practice: “The continued focus by automotive OEMs on producing fuel-efficient vehicles, backed by government incentives and financial aid, will push the consumer hybrid vehicle market to recover quickly; as a result, it will grow at a CAGR of nearly 30% over the forecast period.”

This growth will take place despite the initial cost premium that hybrids will continue to command over conventional vehicles for the foreseeable future, Fisher says.

“The factors that will affect the premium paid for the hybrid include total cost of ownership, and general perception of hybrid technology,” he notes.” “Legislative variables such as vehicle taxes, incentives and fuel taxes will affect the total cost of ownership directly; automakers’ choices on volume and demand, in turn, will affect initial price.

“Ultimately, perception plays a great role in attracting mainstream buyers to these vehicles.”