Originally created 02/04/05

J.D Power: Hybrids to top out at 3 percent of U.S. market



DETROIT - Despite the growing popularity of hybrid vehicles and a slew of new models scheduled in the next few years, the fuel-saving vehicles will probably peak at roughly 3 percent of the total U.S. market by 2010, a new study from the forecasting arm of J.D. Power and Associates said Thursday.

Roughly 88,000 hybrids were sold in the United States in 2004, accounting for about one-half of 1 percent of total vehicle sales.

This year, the number of hybrid models - which typically draw power from a gas or diesel engine combined with an electric motor - is expected to increase to 11 from eight, and J.D. Power-LMC Automotive Forecasting Services says sales will grow to 200,000, or about 1.2 percent of the market.

J.D. Power-LMC expects the number of models to expand to 38 by 2011 - 17 cars and 21 trucks and sport utility vehicles - but that sales will plateau that year at about 535,000, or roughly 3 percent of the U.S. market.

"This is related primarily to the price premium of $3,000 to $4,000 consumers must pay for a hybrid vehicle, compared with a comparable non-hybrid," said Anthony Pratt, senior manager of global powertrain forecasting at J.D. Power-LMC.

Another factor, Pratt said, will be "competing technologies such as more fuel-efficient gasoline and diesel options that will be available after 2006."

Last weekend in New Orleans, at the annual convention for U.S. car dealers, Nissan Motor Co. chief executive Carlos Ghosn caused somewhat of a stir when he said he wasn't sold on the business case for hybrid vehicles - a much different stance than some of his counterparts such as Ford Motor Co. CEO Bill Ford Jr.

During a speech to several thousand industry professionals, Ghosn said hybrids make a "nice story," but they're not yet a good "business story" because their value is lower than their cost.

That said, Nissan is preparing to introduce its first hybrid vehicle, an Altima sedan, next year with hybrid technology licensed from larger rival Toyota Motor Corp., whose Prius was the world's first commercially mass-produced hybrid car.

The J.D. Power-LMC study said Toyota holds more than 60 percent of the U.S. hybrid market and is expected to maintain the largest share through 2011. By then, Toyota's share likely will shrink to about 40 percent, the study said.

Honda currently has 31 percent of the hybrid market but is expected to see its share slip to 20 percent by 2011, J.D. Power-LMC said. General Motor Corp.'s Chevrolet brand is forecast to be the largest domestic brand in the hybrid market, growing its share to nearly 15 percent by decade's end.

Hybrids have seen their demand grow worldwide because of concerns about global warming, decreasing natural fuel supplies and the rising cost of those fuels.

Automakers have said gas-electric engines largely are a transitional technology that eventually will be replaced by hydrogen-powered fuel cells, but experts say a marketable hydrogen vehicle is at least a decade or two away.

In the meantime, the focus is on hybrids. Toyota, Honda and Ford already sell advanced hybrid vehicles in the United States. Ford, which introduced the first hybrid SUV last year, said last month it's expanding its hybrid lineup by four vehicles over the next three years.

On the Net:

J.D. Power and Associates: http://www.jdpower.com