Can Hybrid Cars Survive a Recession?
With the economy slowly sliding into a recession and sales of cars overall, especially SUVs and sports cars, declining, hybrid cars are still selling at a record pace. GM’s recent announcement of a $38 billion loss definitely got people’s attention and while sales for hybrids in December 2007 was off slightly from the year before, hybrid cars continue to fly off of dealer showroom floors.
In January, sales jumped almost 25% from the previous January. Just for comparison, car sales overall dropped almost 3% from the preceding January. The drop in auto sales could potentially spell trouble for auto manufacturers as the economy shows more and more signs that a recession is imminent. Hybrid cars could conceivably keep car makers in the black until the economy recovers from the coming down turn.
Many people point to continued high gas prices as a main reason why hybrid cars continue to sell well, while others think that hybrid cars pull in new buyers with the promise of an environmentally friendly driving experience. Green vehicles have shown a surprisingly strong popularity across all market segments. Hybrid now come in a a wide variety of choices to appeal to a large cross section of people.
There are luxury hybrid, like the Cadillac Escalade, that appeals to the wealthy and status conscious, and stripped down versions like the Toyota Prius. Sales of the Ford Escape rose almost 25 per cent and Mercury’s offering, the Mariner dropped over ten per cent. Toyota’s entries, the Prius and the Camry jumped 37 per cent and 34 per cent in January, 
Gas prices are said to be fueling sales of hybrid cars, but some cars are suffering from a lack of advertising promotion. Honda doesn’t promote the Hybrid version of the Accord anymore, for example. Toyota’s sales could also begin to suffer soon since buyers will no longer receive a tax credit on their purchase since sales have exceeded the mandatory sales cap for the tax credit.
Even though hybrid sales remain strong, there is no doubt that the recession is making itself felt in the hybrid car industry. Hybrid cars are more expensive than their gas only counterparts and the luxury versions of hybrid vehicles are at an even higher financial premium. With the uncertainty in the job market, unstable mortgage loans and higher gas prices, many people that are interested in hybrid cars will stick with the economy end of the class and leave the luxury vehicles for people who are not impacted by an economic slow down or full blown recession.
Luxury vehicles already on the market that could suffer include the Hyrbid Escalade and the Yukon Hybrid. The Fisker Karma Hybrid Sedan is one of the higher end hybrid vehicles that will be introduced later in the year and could be significantly impacted by buyer conservatism. GoOnTheRoad.com believes hybrids may not be truly recession proof, but the recent sales figures show that lower end hybrids will continue to entice buyers with their fuel economy.
As gas prices settle and fall, we’ll see where the future takes hybrid sales… Where do you think they’re headed? The Volt will be available next year (2010 model) - what do you think of the potential sales for this electric vehicle (40+ miles - all electric) and consider all the options available in the market today, where will you buy? Would you spend $40,000 for a Chevy Volt? Post a comment and let us know what you think is in the future for hybrid cars, trucks and electric vehicles.
