Invasion of the Green Machines
High gas prices have drivers chasing after hybrids. Is it a fad or a phenom?
Mike Byrne cares about two shades of green: the kind in the forest and the kind in his wallet. So when the Rice University psychology professor and his wife, Vicky, began shopping for a new family car last fall, they were willing to consider environmental factors--once their financial and practical needs were met.
The Toyota Highlander SUV hit the sweet spot for the Houston couple, with plenty of space for their two kids and an optional third-row seat for bigger family outings. But gas mileage of barely 20 mpg for the V-6 version they wanted was a drawback. Then they heard that Toyota planned to introduce a gas-electric hybrid version of the Highlander, with the muscle of a V-8, the fuel economy of a compact, and even cleaner tailpipe emissions. So they ordered one from a local dealer, even though it won't arrive until late summer--and will cost about $4,000 more than a regular Highlander. "It will make me feel better," says Byrne, "about driving a large vehicle in a place with such lousy air quality."
Hybrids, suddenly, are becoming the feel-good phenomenon of the decade. With gasoline prices at $2.23 per gallon, according to AAA--up 23percent from a year ago--hybrid sales have more than doubled so far this year compared with the same period in 2004. And some industry experts foresee a hybrid in every garage, though others think it could all be one big fad. It's no secret that hybrids like the Toyota Prius, which has both a battery-powered motor and a conventional gas engine--and averages close to 50 mpg--have earned cultlike devotion from a growing niche of conscientious car buyers. Now, a number of automakers, led by Toyota, Honda, and Ford, are betting that a new lineup of hybrids will become America's next must-have vehicles.
A feisty Honda Accord hybrid--the fastest sedan in its lineup--went on sale late last year at a list price of $30,140. So far the company has sold more than 4,500, and the hybrid accounts for nearly 7 percent of all Accord sales. Last month, Toyota's Lexus division began selling the first luxury hybrid, the RX 400h SUV. Buyers snapped up nearly 1,000 in the first week, with an additional 12,000 on order. Those will join 8,000 hybrid versions of the Ford Escape SUV already on the road. All told, nearly 25 hybrids from a dozen carmakers are due in showrooms by 2008. Overall, hybrid sales will top 200,000 this year, according to J. D. Power & Associates, and some experts see nothing but open road ahead. Within 20 years, predicts Jim Press, Toyota's top U.S. executive, "virtually everything on the market is going to be a hybrid."
Japan takes the lead. If Press is right, Detroit could be in for an even worse drubbing than the Japanese have administered over the past two decades. Since 1995, General Motors, Ford, and Chrysler have seen their share of the U.S. market fall from 73 percent to about 58 percent, while Toyota, Nissan, and Honda have raised their share from 18 percent to 28 percent. GM and Chrysler will be at least seven years behind Toyota once their first full hybrids debut over the next couple of years. Ford has earned plaudits for the hybrid Escape, introduced last year, but it won't have a hybrid sedan until 2008.