Prognostications for Hybrid Auto Sales in 2009

As 2009 commences, we are looking at cheap gasoline once again. Honestly, I never expected to see prices this low again in my lifetime. In fact, I never thought that I would see sub three dollar per gallon prices again.

What does this mean in terms of alternative fuel vehicle sales? We have only had these prices for a few months and yet we are already seeing marked declines in hybrid sales. Granted, all automobile sales are currently depressed, yet the sales of hybrid vehicles is even more so. It is extremely difficult for the average consumer to pay the premium for hybrid vehicles in light of cheap gas. Economic times are dictating the sales of automobiles much more than green technologies.

What do you think will happen this year? Will EV's and PHEV's be forgotten in these days of cheap gas? Will US automakers return to business as usual and will we lose all the momentum for alternative fuel technologies we have built up? I hope not.

A sobering article from FT.com:

Americans’ appetite for hybrid cars is evaporating as tumbling fuel prices and tighter household budgets trump environmental concerns.

The sudden reversal in what was, until a few months ago, one of the hottest segments of the world’s biggest car market creates a new area of uncertainty for carmakers, such as Toyota, General Motors, Ford Motor and Honda, that are investing heavily in hybrids and other fuel-efficient technologies.

Industry executives, including Alan Mulally, Ford’s chief executive, have joined environmentalists in urging US politicians to consider the hitherto taboo idea of raising petrol taxes as a way of encouraging fuel conservation.

US hybrid petro-electric sales in November shrank 53 per cent from a year earlier, compared with a 37 per cent drop overall, according to Autodata, a market-research firm. December sales, to be announced on Monday, are to show a similar trend.

Sales of most hybrid models have dropped sharply. Demand for Toyota’s Prius hatchback, the top-selling hybrid, fell by almost half in November from a year earlier. The Camry sedan was down 57 per cent, and the Ford Escape crossover 35 per cent.

The setback has been pronounced for larger models, touted as much for performance as fuel economy. Sales of the Lexus RX400 sport-utility vehicle are now little more than a third of the level a year ago.

Edmunds.com, an online motor service, reports that searches for hybrids on its websites are running at less than a quarter of their peak in May.

George Pipas, Ford sales analyst, said: “The lower gas prices are, the tougher the proposition is to pay a premium for a hybrid engine.”

Hybrid vehicles typically cost $3,000-5,000 more than their petrol equivalents. Toyota has used up tax credits available for hybrids, and several other manufacturers are close to their limit.

Edmunds.com estimates that a Prius owner must now wait more than eight years to recoup the extra cost of the vehicle in fuel savings, compared with three and a half years when the petrol price climbed above $4 a gallon last spring. The average price is now about $1.61.

Mr Pipas said that belt-tightening in the face of the weakening economy had become the dominant factor in the US car market. Small cars accounted for 18.7 per cent of sales in the three months to November, up from 16.6 per cent a year earlier, in spite of the slide in petrol prices.

BREAKING: Democratic Leaders and White House Agree on 15 Billion Dollar Auto Aid Deal

They asked for twice this much but 15 to 17 billion will have to suffice. This amount will keep the Detroit 3 in business until Obama's administration can put together a more comprehensive package.

From Yahoo:

"Democratic leaders and the White House reached a deal to provide billions of dollars in relief to the ailing U.S. auto industry, a senior congressional aide told Reuters on Friday.

The package, which Democratic leaders hope to win passage of next week and send to President George W. Bush, totals between $15 billion and $17 billion, the aide said, speaking on condition of anonymity.

The amount is far less than the $34 billion requested this week by General Motors, Ford Motor, and Chrysler, but Democratic leaders believe the money will keep them going until Barack Obama replaces Bush as president on January 20 and a new effort can be made for a rescue plan."

This is a pretty good compromise between the Bush Administration and Congress that ensures the viability of US automakers for the next 6 to 8 weeks. Hopefully, Obama's team can then rush through better and more complete legislation. I hope the next package contains verbiage stipulating better mileage vehicles and alternative energy cars and trucks like pure electrics.

It appears to me that this was all the lame duck Congressional session could agree to, although I feel they could have done more.

US Lawmakers at it again!

From the Wall Street Journal online:

"House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid sent a letter to Treasury Secretary Henry Paulson urging him to assist the Big Three auto makers by considering broadening the $700 billion Troubled Asset Relief Program to help the troubled (auto) industry."

Hmmm. I didn't know the Treasury Secretary had such broad powers, did you? The more I learn of Nancy Pelosi's legislative prowess (or glaring lack thereof), the less I like her. This is yet another bone-headed initiative spearheaded by Pelosi. Lest I digress further into oblivion, let's shift gears.

Where do the handout's end? Exacty how many billions of dollars is enough to assuage the greedy, insatiable executives of the Big Three US automakers? The recent 25 billion dollar "loan" is apparently not even enough to qualify as a tiny Band-aid. I have heard rumours of a 50 billion dollar package recently and now this announcement of unknown proportions gives me tremendous pause. Does NASA even get this much money?

Apparently, we are going to bail out these worthless companies, who squandered big profits when times were good and the SUV's and trucks rolled off the production line, but why can't we attach some strings to these handouts? Here are three ideas I have:

1. All upper management is relieved of duties within 30 days.
2. Fleet mpg AVERAGES must be 35 or greater.
3. Alternative fuel vehicles must be offered and each automaker must have a CNG, PHEV AND EV model for sale.

I realize that we are in some financial hard times at the moment, but I truly believe that foreign oil dependency is killing us. We must turn this ship around and stop the madness of driving around in gas guzzling vehicles while importing foreign oil.