February Hybrid Market Hit By Toyota's Slump, Incentives on Conventional Vehicles

February Hybrid Market Hit By Toyota's Slump, Incentives on Conventional Vehicles

By John O'Dell March 5, 2010

Pinched by big incentives on conventional vehicles and a slump at beleaguered Toyota Motor Co., sales of hybrid cars and trucks failed to keep pace with the rest of the market in February as they fell to their lowest level in a year.

While conventional vehicle sales were up for the month with a 12.2 percent gain from January and rose 12.8 percent from February '09, hybrid sales fell 3.7 percent from the previous month and were up just 3.2 percent from a year earlier.

Several of the newer hybrids - Ford's gas-electric Fusion and Honda's Insight most notably, posed fairly decent gains over January.

But Toyota's February depression - caused by multiple safety recalls that included problems with the software controlling braking functions in the popular Prius and the Prius-based Lexus HS 250h - overcame other maker's hybrid gains and dragged down the entire segment, said Edmunds.com analyst Ivan Drury.

With the exception of the extreme low-volume Lexus 600h L ultra-luxe hybrid sedan, which saw sales jump 66.6 percent to 15 from 9 in January, all of the Toyota and Lexus hybrids posted significant declines in February. Even the Prius, the nation's top-selling hybrid model for 77 consecutive months, dropped by 6.1 percent.

Even so, Toyota wasn't the worst corporate performer in the hybrid market: it's 10.1 percent drop from January paled by comparison to Nissan's 41.5 percent hybrid sales decline for the month; and its 7.3 percent dip from a year earlier looked like good news contrasted with General Motors Corp.'s 54.4 percent plunge from February 2009.

Nissan was hurt in the monthly comparison because it had an unusually good January for its single hybrid offering, the gas-electric Altima sedan that's sold in just eight states. Otherwise the sale in February of 619 Altima hybrids was well within normal volume ranges over the past year.

GM's more precipitous decline from a year ago because almost all its hybrids are expensive versions of its large pickups and truck-based SUVs - the poorest performing segments in the market these days.

Also hurting the General a little is that it has killed its Saturn line, which offered hybrid versions of its Vue crossover SUV and Aura sedan models. They never sold well, but they did add numbers to the totals - until now. Dealers sold just 2 Aura hybrids and 4 Vue hybrids in February.

Despite the tumble from February '09, though, GM hybrids posted a tiny gain over January, up 2.9 percent as declines in most of the model lineup were offset by a big jump in sales of the Cadillac Escalade Hybrid.

The usually pricey model was made a lot more affordable in January by incentives of up to $7,000 on backlogged 2009 models, according to Drury.

It's possible that the near-tripling of Escalade sales from 52 in January to 146 in February came at the expense of the more plebeian Chevrolet Tahoe Hybrid, he said.

The Chevrolet, after all, is a downscale twin that uses the same chassis, powerplant and major body panels. So why buy a Chevy when you can get a Caddy for nearly the same price? Tahoe Hybrid sales in February dropped 45.8 percent to 83 from 153.

Ford and Honda were the only hybrid sellers in February with consistent gains both from January and from February 2009.

Honda led with a 51.2 percent increase from January - thanks to a bump in sales of its redesigned 5 passenger Insight and the Civic Hybrid that closely corresponded to the declines in Toyota Prius and Lexus HS 250 h sales - and a 73.3 percent jump from February 2009, when it offered only one hybrid model - the Civic.

Ford's February also benefited from new models in the comparison with February '09, when its popular Fusion Hybrid and its Mercury Milan Hybrid twin weren't in the mix.

Ford hybrid sales were up 62.2 percent from a year earlier and rose 12.4 percent in February. All four of its hybrids posted gains over January, but the bulk of the month's increase came from Fusion Hybrid sales.

We can't stress too much the futility of trying to draw conclusions and divine trends from one or two months of data.

But Edmunds.com has been tracking monthly hybrid sales since the original players - Honda's now discontinued two-seat Insight and the first generation Toyota Prius, began getting competition.

Several things become clear, though, with eight years of data:

• Hybrids don't do any better than conventional cars and trucks in February, which is rarely a good month for car sales in general thanks to impending tax season, the need to catch up with holiday bills and sometimes fierce winter storms that promote staying at home over going car shopping.
• The cost of gas a lot of do with hybrid sales volume in any month - sales rise and fall with pump prices.
• Sales also are affected by incentives, rising when hybrids themselves are being discounted by automakers and falling when there are hefty incentives on lots of conventional cars but relatively few on hybrids, as is usually the case when gas prices begin their summer climb.
• Even as more hybrids come into the market, their share of the market overall grows slowly and is volatile - February's 2.12 percent market share is the lowest for hybrids since 1.97 percent in December 2008. And while it was tracking to finally hit 3 percent this year after a full-year high mark of 2.78 in 2009, a continuing weak economy may hold things back.

Here's a look, by manufacturer and model, at hybrid sales in February versus January, 2010, and February 2009.

Ford Motor Co.
    Ford Fusion - 1,235; 1,091; NA.
    Ford Escape - 702; 641; 1,172.
    Mercury Milan - 82; 61; NA.
    Mercury Mariner - 80; 74; 122.

General Motors Corp.
    Chevrolet Malibu - 68; 67; 197.
    Chevrolet Silverado - 64; 50; 28.
    Chevrolet Tahoe - 83; 153; 252.
    GMC Sierra - 42; 47; 19.
    GMC Yukon - 86; 73; 152.
    Cadillac Escalade - 146; 52; 228.
    Saturn Aura - 2; 25; 23.
    Saturn Vue Greenline - 4; 14; 188.

Honda Motor Co.
    Civic - 346; 253; 1,362.
    Insight - 2,014; 1,307; NA.

Nissan Motor Co.
    Altima - 1,619; 1,059; 463.

Toyota Motor Corp.
    Lexus GS 450h - 22; 41; 22.
    Lexus HS 250h - 712; 1,247; NA.
    Lexus LS 600h L - 15; 9; 22.
    Lexus RX 450h - 890; 1,016; 1,502.
    Toyota Camry - 1,011; 867; 2,080.
    Toyota Highlander - 339; 526; 956.
    Toyota Prius -7,968; 8,484; 7,232.

Total Market

All hybrids -16,530; 17,157; 16,020.
Non-hybrids - 761,659; 678,550; 675,053.

John O'Dell:  is an AutoObserver Senior Editor. Follow @AutoObserver on Twitter.