Thursday, February 14, 2008

Exploring The Marketing of Hybrids

It appears that like most things in the automotive world, styling and the "look at me factor" have been the reasons for a hybrid's success or failure. The first mass produced hybrid (gas and electric) on the market in the United States was the Honda Insight. That vehicle was styled to be attractive to the wind, not the eyes. Its tear drop shape made it the most economical vehicle for sale in the US for its entire life cycle. Many people thought it was the rebirth of the Civic CRX that was also a fuel economy champ in its time. Unfortunately for the Insight, it had bit too much styling and not enough practicality to be loved by those who bought a hybrid as a fashion accessory.

Honda later came out with the Civic Hybrid, which to the untrained eye looked identical to a garden variety Civic. This vehicle had the opposite problem of the Insight, it actually looked too much like a regular Civic. The car returned over 50 mpg on the highway in manual form, but it was a partial failure on the showroom floor. It appeared that hybrid buyers were more interested in what others thought of their choice rather than the fact that vehicle was more frugal on gas.

Toyota seemed to recognize Honda's mistakes when they brought the first generation Prius to the US market in 2001. The Prius looked different enough to be noticed by the average motorist, but not different enough be considered an eye sore. The Prius could also be driven at slow speeds without internal combustion power, which meant it had the ability to impress people that new nothing about cars. Toyota also acknowledged that the only way they were going to see a profit(which they supposedly did on the last of the first generations ones that went out the door), they had to make the vehicle practical enough to be a daily driver for a family, not a two seater with limited load capacity like the Insight. Unlike the Insight, Toyota equiped every Prius with a Continuously Variable Transmission (CVT) and air conditioning. These features allowed it to be considered more of a real car and less of a toy/extra car that the Insight was by design. The 20+ thousand dollar Prius managed to rack up mileage in the mid 40's, which while good, was not significantly better than a 12 thousand dollar Corolla, especially one equiped with a manual transmission.

Both Honda and Toyota are well into their second generation hybrids and have more or less stayed on the same path as the first generation cars. They Toyota still looks like nothing else on the road and the Honda easily be mistaken for a Civic that costs thousands less. As a result of these styling changes, the Prius continues to outsell the Civic Hybrid. Honda even tried to make its best selling sedan, the Accord, a little greener by making it into a hybrid as well. That car, which was cancelled after about two model years, was faster than the regular six cylinder car and got great reviews. Unfortunately, the Accord Hybrid didn't look much different than a standard Accord and had trouble matching the four cylinder Accord's fuel economy.

Toyota must have learned from the Accord lesson when the marketed the Lexus RX400h and subsequent "performance hybrids." Instead of going after the green crowd, Toyota realized that if they made a vehicle a hybrid, all it had to do was get slightly better mileage than the regular version and people would buy it. Most of advertising and marketing for these types of hybrids focus on the performance of the vehicle, not the gas mileage.

The fact that many of today's hybrids, excluding the current GM full size SUV system, get only fractionally better mileage than their non-hybrid models the proof that many people today buy these vehicles for the environmental statement that they make. Even the state and federal government has bought into the hybrid statement and issues a limited number of car pool lane passes to each model of hybrid that can meet certain combined fuel economy criteria. The ironic thing about this is that hybrids are most efficient and cost effective when sitting in traffic and when being driven in the city. All commerically available hybrids today need gas engine power to run at freeway speeds.

I mention the GM hybrid system because it seems to be the first one that has the potential to pay off as an economical alterative to the non-hybrid version. It is projected to get about fifty percent better mileage in the city than the standard model. This is significantly better than the smaller hybrids when compared to their standard models.