Hybrids and Highly Popular Models

This is a bit of a free thinking post, so forgive me if I ramble.

Kelley Blue Book released the 'most researched vehicles' for the first half of 2009 and there aren't many surprises.
1. Honda Accord
2. Honda Civic
3. Toyota Camry
4. Honda CR-V
5. Toyota Corolla
6. Toyota Highlander
7. Nissan Altima
8. Toyota RAV4
9. Toyota Prius
10. Ford Mustang
11. Honda Pilot
12. MAZDA3
13. Honda Odyssey
14. Ford Fusion
15. Ford Escape
16. Chevrolet Camaro
17. Volkswagen Jetta
18. Toyota Sienna
19. Chevrolet Malibu
20. Lexus RX350

What I found interesting is how many of the vehicles have hybrid models. Eight of the 20 models listed have (or just are) hybrids. The Accord, Civic, Camry, Highlander, Altima, Prius, Fusion, Escape, and Malibu all have hybrid engines.

To me that indicates two things.
1) People in first half of 2009 are still very interested in fuel economy and
2) automakers are making hybrids out of already popular models.

This is something I've noticed before, but I thought it would make a good discussion for today. Part of the reason (I believe) automakers pick high production models to insert hybrid engines into is to draw attention to the original model, making them more competitive.

Since one company did it, the others feel like they have to follow suit. Once Honda and Toyota picked the Camry, Civic and Accord; Nissan, Ford and GM had to follow suit with the Altima, Fusion and Malibu.

After all, they want to make sure the word gets out they are building hybrids. Given the profit margin on the first generation of hybrids (i.e. a loss), you might expect them to pick low production models. That way they would be able to justify not building too many of them (and losing money on each of them). That's how important the PR of hybrid technology is to the car companies.

As an aside, it's the initial research cost they have to overcome. Ford, Toyota and Honda are making money on their hybrid cars at this point. Since they were in the game first, they have been selling hybrids long enough to make a profit. GM decided to build cheaper hybrids, so it's possible they could have made money on their mild systems.

In order to keep the PR up, while minimizing losses, the car companies have, in the past, followed several different strategies. Ford and Nissan limited production of their hybrids as much as they can. And Nissan didn't develop their own hybrid engine, they just buy them from Toyota.

GM made a cheaper hybrid and talked as much as they could about it. Then they built a really expensive version or their SUVs and trucks. Unfortunately for them, the SUV and truck market have taken a big hit over the past couple of years. Plus, fuel efficient mavens don't tend to buy SUVs and trucks.

But Toyota and Honda decided they had to go for it, and spent the money to create the best hybrids they could. Honda has experimented with several different formulas (performance hybrid - Accord, fuel efficient hybrid - Civic, cheaper hybrid - Insight, most fuel efficient two-seater - original Insight). Toyota decided to stick with their winning strategy (Prius).

And so it's these two companies that have shown the way. Honda has shown what doesn't work more than what does work so far. But both have continued their research and cut costs in each successive generation of hybrid engines. It was the harder way to do it, but they have done it.

And now the others are playing catch up. GM has decided to try and 'leap-frog' the others with the development of the Volt. Ford has finally developed the Fusion and Milan hybrids (although they remain cautious and continue to limit production). Nissan is still behind, but hopes to have their own hybrid system soon.