Sharp fall in hybrid vehicles sales as US tightens belt
By Bernard Simon in Toronto

Published: January 1 2009 23:31 | Last updated: January 1 2009 23:31

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.

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