||Alt-Fuel Vehicles Face New Rivals
Automakers trying to market alternative powertrains are finding fuel-efficient internal combustion engines to be stiff competition.
In particular, the new breed of compacts and subcompacts with highway fuel-economy ratings reaching 40 mpg are attracting price-conscious buyers. Apart from miles per gallon, the key selling point is a price several thousand dollars below hybrids, plug-ins and EVs.
"Buyers, particularly younger buyers, love it when they can get this affordable car with 40 mpg," says John Krafcik, CEO of Hyundai Motor America, whose company breaks out sales of vehicles with 40 mpg highway fuel economy ratings.
Through October, Hyundai says it sold 177,323 such vehicles -- one third of its U.S. sales. Hyundai models getting 40 mpg include the Sonata hybrid, but Krafcik says its volume lags far behind that of gasoline-powered vehicles such as the Elantra sedan, Accent and Veloster.
"The way for the industry to close the gap on fuel economy isn't hybrid powertrains," Krafcik adds. "They're expensive, complicated and they create a challenge with margins and profit."
Sales of EVs and plug-ins are still in their infancy. But even traditional hybrids, which have been on sale for more than a decade, have stayed in the 2 percent market share range, notes John Viera, director of sustainable business strategies at Ford Motor Co.
"It does get down to the value proposition," Viera says. "At the end of the day, these vehicles from a value perspective are better than a hybrid."
That doesn't necessarily matter to hybrid buyers, according to analyst Mike Omotoso of LMC Automotive. Hybrid buyers generally are affluent and environmentally conscious, he says.
Automakers differ on whether there is direct competition between hybrids and efficient internal combustion vehicles. Doug Coleman, national brand manager for small cars at Toyota Motor Sales, says the Prius -- which accounts for nearly half of U.S. hybrid sales -- draws a different clientele than other Toyota nameplates.
The Prius doesn't line up with smaller vehicles such as the Hyundai Accent or Ford Fiesta. There is little cross-shopping between the Prius and Toyota's Yaris subcompact, he adds.
"Younger people may aspire to have hybrids, but they really don't have the money to buy hybrids in the market today," Coleman says. "It doesn't mean that they don't want them."
But Toyota hopes to attract small-car shoppers when it brings out the Prius C variant, a subcompact on the Yaris platform, next summer. Coleman says the move is more a response to customer feedback than to the Prius' sales competition with small 40-mpg vehicles.
"It's not as a reaction to the higher fuel economy in those segments," he said. "It's just us listening to what our customers are saying."
Cross-shopping Cruze, Volt
General Motors spokesman Rob Peterson says the Chevrolet Cruze is the vehicle most often cross-shopped against the Chevrolet Volt plug-in. The Cruze Eco variant, with a $19,995 base price, including shipping, and a 40 mpg highway rating, accounts for about 20 percent of Cruze sales, he says. Peterson says the two compacts give Chevrolet two powertrain options on the showroom floor.
Ford has two models rated at 40 mpg highway, the Fiesta SFE and Focus SFE, but would not divulge sales breakdowns for those versions.
Dealers say they see a clear division between those who buy hybrids and those who don't. Bill Perkins, owner of Merollis Chevrolet in Eastpointe, Mich., and Taylor Chevrolet in Taylor, Mich., says Volt buyers come into the store having researched the technology and wanting that vehicle.
But he says fuel economy is increasingly important to all buyers.
"Now that gas is above $3, it always comes up in the conversation," Perkins says. "People always want to know 'What kind of fuel economy am I going to get?'" It doesn't necessarily keep them from buying what they want, but they want to know."
Scott Fink, owner of three Hyundai stores, says most buyers are indifferent to technology and in fact may be intimidated by hybrids and other alternative powertrains.
By contrast, he says, "I think the hybrid buyer is someone who leaves the house saying, 'I want to buy a hybrid.'"
Fink owns Hyundai of New Port Richey, Fla.; Hyundai of Deland, Fla., and Hyundai of Wesley Chapel, Fla.
He says Hyundai's 40-mpg ratings are a strong selling point. His sales staff helps buyers calculate the payback period for different vehicles.
"I think customers do that raw math," he said. "We do the real math for them. It is an effective sales tool."
(Source: Automotive News, 11/14/11)
Click here to email to client
Back to Radio Sales Today
Click here to view classified ads in the RAB Job Center.
Digital: How Stations Make More Money
Every year brings new ideas for making money with digital. Next year will be no exception.
Join RAB's John Potter for this information-packed webinar, where you'll learn the hottest digital trends for 2012, predictions for the growth of digital advertising, and strategies your station can use to generate more revenue from this increasingly important source.
This presentation will be offered on Tuesday, December 6, at 3 PM (Central), and again on Thursday, December 8, at 10 AM (Central). For more information, click here.
Tell Us About Your Ad Campaigns
If you are hosting a local event or promotion for any mass retailer including Walmart, Kohl's, J.C. Penney, Amazon, Best Buy, Toys "R" Us, Macy's, Walgreens or Target, we want to hear about it.
Please click the link below and send us an email. Be sure to include a brief summary and campaign highlights. Send your email to: email@example.com.