Does everyone think someone else should drive a green car? | South China Morning Post
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Does everyone think someone else should drive a green car?

PUBLISHED : Wednesday, 16 January, 2013, 10:35am
UPDATED : Wednesday, 16 January, 2013, 10:35am

The green car market is only inching along in the United States, hampered by high comparative costs and limited ranges on pure electric vehicles, but automakers remain confident their time will come.

“Everybody thinks that everybody else should be driving a green car,” said Dave Sergeant, an auto analyst with JD Power.

Automakers have launched a host of hybrids and electric vehicles in recent years with huge fanfare in response to political pressure from the Obama administration to improve fuel economy drastically.

But lower emission vehicles are still struggling to find their public, winning over just 3.5 per cent of US sales last year, with about 500,000 vehicles sold.

That is perhaps one reason why they were not a prominent part of this year’s Detroit auto show, where luxury brands, pickups and performance dominated new vehicle launches.

“It’s getting better every year but there’s a very slow adoption rate,” said Jesse Toprak, an analyst with the specialty site TrueCar.com.

Hybrids have overcome the initial fears many consumers had about the reliability of a new technology.

However, few are willing to swap to alternatives like a pure electric, compressed natural gas or hydrogen fuel cells that could strand them on the side of the road if they get too far from a filling station or electrical outlet, Sergeant said.

“Consumers are terrified by the range issue,” he told AFP.

Cost is another major concern as consumers “tend to have a poor ability to do the math in terms of what they’re going to pay and what they’re going to save” on a hybrid, he said.

And even with big tax breaks, the US$30,000 to US$40,000 price tag for a plug-in electric Chevy Volt or fully electric Nissan Leaf is also off-putting.

Nissan responded to poor sales of its pioneering Leaf by slashing the price Monday by about US$6,000, which would bring it down to as little as $18,800 in some US locations, once tax breaks are considered.

Leaf’s US sales rose just 1.5 per cent to 9,819 vehicles last year, far below Nissan’s target of doubling sales in its second year on the market.

Global sales rose 20 per cent, well below Nissan’s target of a 50 per cent increase.

“It’s a disappointment,” admitted Nissan-Renault chief Carlos Ghosn.

General Motors managed to triple the sales of its plug-in electric Volt to nearly 23,500 vehicles last year, but that remains well below the largest US automaker’s target of 35,000.

“Unless gas prices go up to five to six dollars a gallon, we don’t see a major shift in this,” Sergeant said, noting that US consumers have become accustomed to petrol priced at around $3.25 a gallon.

“There will be a very slow drift towards these vehicles but it’s going to be very gradual.”

Automakers expressed confidence in green cars currently on display at the Detroit auto show.

“When you look at our sales for electrified vehicles, we’re seeing growth in that market,” said Mark Fields, chief operating officer at Ford, which is developing a whole range of green cars, including its compact C-Max.

Toyota dominates the green car market in the United States, accounting for 70 per cent of hybrid sales.

“There’s no question that over time the price of fuel is going to go up, so we’re confident that our plan to develop hybrids is the right long-term play, as is our foray into extended range plug-ins,” Jim Lentz, head of Toyota Motor Sales USA, said in an interview on the sidelines of the show.

Toyota’s dedicated hybrid line Prius is the best-selling car in Japan and achieves volumes in the United States that most mainstream brands dream of: 236,000 last year.

With hybrids also available in Toyota’s top selling Camry and Highlander models along with its luxury Lexus brand, they now account for 16 per cent of the Japanese automaker’s US sales at more than 327,000 last year.

Despite an outsized investment in advertising of green cars -- which can create a ‘halo effect’ for the whole lineup without necessarily leading to sales -- Toprak said automakers haven’t done enough to explain the benefits of hybrids.

“They need to do a better job of communicating the financial benefit of owning this car,” he told AFP.

With the GM Volt, if you calculate the benefits of tax breaks, attractive leasing costs and fuel savings “it’s basically a free car,” he said.

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