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Consumers Take Second Look at Hybrids

Buyer Interest Drops as Fuel Expectations Become More Realistic

July 17, 2007

Now in its second year, the study examines the reasons why consumers consider or avoid alternative powertrain vehicles.

The study includes the Automotive Environmental Index, which combines U.S. Environmental Protection Agency (EPA) publicly available information data related to fuel economy, air pollution and greenhouse gases for 2007 model-year vehicles and J.D. Power and Associates’ voice of the customer data related to stated fuel economy.

The study finds that 50 percent of new-vehicle shoppers are considering a hybrid -- down from 57 percent in the 2006 study.

While a general decline can be observed across all age groups, in particular younger vehicle shoppers, those 16 to 25 years old, appear less interested in the powertrain technology, with 60 percent considering a hybrid in 2007, down from 73 percent in 2006.

The average additional price hybrid considerers are willing to pay for this powertrain is $2,396, with the expectation of receiving an improvement of 18.5 miles per gallon (MPG) over a traditional vehicle of similar size.

“In the 2006 study, we found consumers often overestimated the fuel efficiency of hybrid-electric vehicles, and the decrease in consideration of hybrids in 2007 may be a result of their more realistic understanding of the actual fuel economy capabilities,” said Mike Marshall, director of automotive emerging technologies at J.D. Power and Associates.

“While hybrid sales are steadily increasing, they continue to face competition for market share against an increasing offering of other alternative powertrains and fuels options.”

Diesel Interest Rises

The study also finds that consumer consideration for purchasing clean diesel vehicles, which were newly introduced to the market in 2007, is at 23 percent. In 2006, only 12 percent of shoppers considered purchasing diesel vehicles.

On average, considerers of this powertrain are willing to pay an additional $1,491 for the clean diesel option and expect an average additional fuel economy of 15 mpg.

“As the automotive industry steadily offers more alternative powertrain/fuel options to consumers, buyer preferences will continue to shift the market in the coming years,” said Marshall. “With high fuel prices, perceived dependency on foreign oil and an increased focus on environmental issues all being top of mind among consumers, manufacturers will not only have to continuously make efforts to produce more fuel efficient vehicles, but also to diversify the range of options.”

Toyota Tops

Toyota is the highest-ranking nameplate in the Automotive Environmental Index, followed by Volkswagen and Honda, respectively.

Toyota has improved by six rank positions since the 2006 study and has a strong showing with both hybrid and gasoline-powered models. Honda also performs well, with four models in the top 30.

Ford and Nissan follow, each with three models. Similar to 2006 results, there are only two luxury models in the top 30; the Lexus GS 450h and RX 400h.

In 2007, the top 30 Automotive Environmental Index includes 10 hybrid models -- up from eight models in 2006:

• Ford Escape Hybrid
• Honda Accord Hybrid
• Honda Civic Hybrid
• Lexus GS 450h
• Lexus RX 400h
• Mercury Mariner Hybrid
• Saturn VUE Green Line
• Toyota Camry Hybrid
• Toyota Highlander Hybrid
• Toyota Prius

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