Hybrid Sales Blast Off

A recent Associated Press story puts hybrid sales up by 81% for 2004, and I would not be surprised if the numbers released next year for 2005 sales are even better.

Say the word "hybrid," and most folks immediately think of the Toyota (NYSE: TM  ) Prius. There are other hybrids out there, but the Prius dominates the market with 64% of all hybrid registrations for 2004. Toyota is on course to double sales of the Prius this year and can count on additional hybrid sales from the Highlander and Lexus RX400h.

Honda (NYSE: HMC  ) comes in a distant second in hybrid sales, with its Civic Hybrid grabbing 31% of sales and its Accord Hybrid and Insight models also adding to the growth. The sale of a few Ford (NYSE: F  ) models rounds out the hybrid sales population. Not surprisingly, GM (NYSE: GM  ) and DaimlerChrysler (NYSE: DCX  ) are almost entirely absent from the list -- both offer not-very-efficient hybrid trucks -- and Chrysler in particular has discounted the idea of hybrids for some time. However, it seems both GM and Chrysler will begin to sell some more-robust hybrids in the future.

All of this is of interest to me because my family is soon to be in the market for a new car. My wife and I have considered six models, including a couple of hybrids. Our interest in hybrids is like that of most people. We want better fuel economy, we want to be kinder to the environment, and particularly in the case of the Honda Accord, I want a car with some oomph (my wife is indifferent to the "oomph" issue). You've probably noticed I left out the economic argument for a hybrid. That's because by my estimates, which include the $2,000 federal tax adjustment to gross income, our family would need to double or triple our driving habits, or see fuel prices approach $3 a gallon, before a hybrid makes economic sense for us over the estimated number of miles we would own the car.

So why are we still thinking about purchasing a hybrid? Primarily because we like the greener aspect of a hybrid and, less important to us, as a hedge against increasing fuel costs. In the end, I think we will wait another generation or two before getting a hybrid for some of the hybrid frenzy to die down.

I think it pays to remain intrigued by the developments in hybrids from an investor's point of view and to note that when it comes to making cars that grab consumers' attention on quality, performance, styling, and now being green, the big three American manufacturers again find themselves playing catch-up.

For more Foolish coverage of the auto industry, take these stories for a spin:

Fool contributor Nathan Parmelee has no financial interest in any of the companies mentioned, but he used to own a Honda Accord.


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