CAFE
reality: Most interested in hybrid vehicles, but few
buyers
Friday, November 30, 2007
Most
still pick the Camry over the Camry hybrid
There is a belief, especially among hybrid critics, that
the Toyota
Prius is the best selling hybrid vehicle because it
looks different. While there are some that buy the Prius
purely for status, many others buy it purely for fuel
economy.
But there is another reason that might be even more
important when considering hybrids
cars and fuel economy: short term versus long term
thinking.
A buyer goes into Toyota, for example, to buy a new car.
Tired of high gas prices they decide to check out the
Prius, but find it just isn't their kind of car. So, the
salesperson takes the buyer to a Camry
hybrid and the buyer falls in love. Yet, the buyer
can't get over the sticker shock of the cost difference
between the Camry hybrid and a conventional Camry. Sure,
in about 5 to 10 years, he'll make back the hybrid
investment, especially if gas prices go up, but the buyer
chooses lower payments today instead - just like most
other hybrid-interested consumers.
Mike Jackson, CEO of AutoNation,
alluded to this reality yesterday during a debate
with New Mexico's Governor Bill
Richardson. Richardson would like automakers to
achieve a CAFE minimum of 50 mpg by 2020. Jackson asked,
'Who's gonna pay for it?'
According to Jackson, 65 percent of potential car buyers
have an interest in hybrid
vehicles (AutoNation shoppers?), but only 2 percent
actually buy hybrids. Achieving 50 mpg might be
technically possible, but is it cost-sensible as far as
consumers are concerned? Today's technology can't achieve
those levels of fuel economy and consumers still aren't
buying more fuel efficient vehicles because of cost. So,
why would they buy even more expensive technology in the
future?
Jackson, an advocate of a gas tax, believes that consumers
would choose to recycle some of the 250 million vehicles
on the road today rather than buying new, more expensive
fuel efficient vehicles. And, a resurgence in used SUV
resale value seems to strengthen Jackson's point. Such
a trend, Jackson states, would be a disaster in terms of
fuel economy, pollution, global warming and auto jobs.
Even worse, Jackson claims, if the government subsidized
the auto industry to help cover the costs of this
technology - which would still cost more than conventional
technologies even after subsidies - most consumers
wouldn't buy them and these vehicles would languish on
dealer lots - costing tax payers and automakers.
As evidence Jackson notes that since gas has gone up from
$1.50 to $3.00, fuel economy has increased by half of one
percent. Ultimately, $3.00 gas is having little overall
effect on fuel economy. Consumers might talk about their
foreign oil dependency concerns, or global warming
concerns, but they have yet to take any real action on
their concerns.
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