When it comes to cars, hybrids are hot. High gas prices and plenty of press coverage have created the right conditions for an explosion in U.S. hybrid sales over the past year or so. Now, every automaker wants a piece of the near-molten market. But the very influx of new players may begin to have a cooling effect as the laws of supply and demand take over.
The coming year could test the depth and resiliency of the hybrid car market. Japanese automaker Nissan (NASDAQ:NSANY) expects to begin selling a gas-electric version of its Altima next year. Notably, the automaker is planning on building the sedan in the U.S., according to the Associated Press, a move that could allow the car to appeal to people inclined to buy American.
Still, national origins or even economics appear to have little effect on the dynamics of the hybrid car market. The Toyota (NYSE:TM) Prius, whose status as the world's first mass-produced hybrid helps make its name synonymous with the technology, remains far and away the segment's biggest seller. Prius represented 73% of hybrid sales in May, according to Green Car Congress. This despite the presence of several competing vehicles, including the American-made Ford (NYSE:F) Escape. As for economics, even Toyota admits that there is no financial justification to buy the Prius based on current gas prices, although the company does hope to make hybrids competitive with ordinary cars by 2010.
In fact, the hybrid story seems to have a lot to do with novelty. For now, the Prius remains the symbol of that uniqueness and continues to capture the most buyers. By contrast, sales of Honda's (NYSE:HMC) hybrid Accord and Civic and Ford's Escape have been growing, but more slowly and less consistently over the past several months. Perhaps the most ominous possibility is that with more hybrids in the showroom and on the road, consumers' fascination with technology will wear off. In that case, as Nissan and others jump into the hybrid game, they may not find the growth they were hoping for.
A battery of Foolish takes on hybrids:
Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.
