It used to be the Los Angeles Auto Show was considered the “green auto show”. Now with gasoline soaring towards $4 gallon gasoline, every auto show is a green showcase. At this week’s New York International Auto show – a staple of the annual car circuit, the spotlight will be not be on the latest muscle cars but instead on the hottest market segments, fuel-efficient hybrid electric vehicles and high efficiency, conventional gasoline cars that get 40 MPG or more. With no relief in sight for high gasoline prices, 2011 is shaping up to be a record breaking year for fuel-efficient cars.
The Market Has Spoken – and it Wants More MPG
Rising fuel prices have primed consumer demand for fuel efficient cars. According to Michigan-based auto market expert Alan Baum, March sales of hybrids rose 46%, almost three times as fast the overall market rate of 17.2%, compared to the same month last year. The market for highly fuel efficient small cars, such as the Honda Fit, rose 30%, almost twice the average rate. The worst performing segment? Traditional, truck-based SUVs, which grew at 7.2%, less than half the rate of the market average.
Hybrid Tipping Point? More Models, Technology Gets Cheaper
As I blogged previously, the market for hybrids may be reaching a tipping point as the technology matures, spreads to more models, and gasoline prices keep rising. Last week, the 1 millionth Prius was sold in the United States.
According to Alan Baum’s forecast, the number of hybrid models (not including plug-ins) is expected to double by model year 2012 from the current 22 models to 43 models. Kevin Riddell, an auto analyst at consultant J.D. Power and Associates, sees hybrids and electric cars market share almost doubling by 2012, to 4.5% of all new vehicles purchases by 2012 from 2.4% last year. With a possible 13 million total sales this year, this could mean hybrid sales are on pace to top half a million units in 2012, vastly exceeding the 275,000 units sold in 2010.
Many of this next wave of hybrid models will use an innovative new, lower-cost design called the “Parallel 2-clutch” or “P2”. This simpler system is being introduced on new hybrids this year by Nissan (M35 Hybrid), Hyundai (Sonata Hybrid), Kia (Optima Hybrid), and Volkswagen (Touareg Hybrid) and in near future by Honda (yet unnamed midsize vehicle), BMW, Mercedes, Audi and Porsche. According to a new Society of Automotive Engineer report, the technology can lower the cost of today’s dominant design by at least a third and probably more. As I was quoted in USA Today as saying, these low-cost systems are “system[s] for the masses that’ll really push (hybrids) into the mainstream.”
40 is the New 30 (MPG) – 11 models join the high mileage club
As reported by Automotive News, there will be eleven cars offered this calendar year that achieve at least 40 MPG on the highway. This development is nothing short of remarkable, especially after decades of resistance from automakers to building highly fuel efficient cars. These engineers have accomplished what auto lobbyists have long said couldn’t be done. As the floor of the New York auto show will show, it already has.
Members of this exclusive but growing 40 MPG club are:
2011 Ford Fiesta SE Sedan, 2011 Ford Fiesta SE Hatchback, 2011 Chevrolet Cruze Eco, 2011 Hyundai Elantra, 2011 Smart ForTwo, 2012 Ford Focus SE Sedan, 2012 Honda Civic HF, 2012 Hyundai Accent, 2012 Hyundai Veloster, 2012 Kia Rio, 2012 Kia Rio, and 2012 Mazda 3.
Long Term Fundamentals Strong: High Gasoline Prices, Stronger Standards
Hybrids and high MPG cars are likely to remain hot. Last week Moody’s, the credit rating agency, upgraded their outlook on the global integrated oil and gas sectors on the basis that soaring oil prices will “remain strong well into 2012."
Equally as important, there is now near certainty that U.S. carbon pollution and fuel economy standards will be significantly strengthened. U.S. Congress no longer has a route to block the U.S. Environmental Protection Agency or California from moving forward with model year 2017 to 2025 standards this fall. President Obama also recently announced a 33% import target cut which will undoubtedly necessitate stronger fuel economy standards.
This next phase of standards could result in average fleet fuel efficiency as high as 62 mpg. It will clearly accelerate hybridization of the fleet, with perhaps over half the market by model year 2025 being hybrids, according to joint US EPA, DOT and California analysis.
Beginning this Friday, as people and press file through the New York International Auto show, they will be seeing a lot of new designs – and a lot of innovative new fuel efficient vehicles. The market has spoken and automakers are finally delivering.