Most hybrid owners don’t buy hybrids again

Source: Julia Pyper, E&E reporter • Posted: Wednesday, April 11, 2012

Only about a third of the nation’s hybrid owners were repeat hybrid buyers last year, indicating that high fuel prices have so far had little impact on hybrid loyalty rates, according to the Polk automotive research firm.

The number of hybrid models on the market in the United States has more than doubled since 2007, yet only 35 percent of hybrid vehicle owners returned to the market in 2011. Without factoring in the repurchase rate of Toyota Motor Corp.’s popular Prius, hybrid loyalty dropped to less than 25 percent.

Return rates on hybrid cars have been pretty flat for years, said Brad Smith, director of Polk’s Loyalty Management Practice. Between 2008 and 2011, loyalty never reached beyond 40 percent, he said. Now, because there are so many high-mileage gasoline vehicles in the marketplace, he said he doesn’t expect the numbers to change much.

“As of today, the U.S. population just seems to prefer gasoline vehicles over their alternative counterparts, and the [low] repurchase rate of hybrids is an indication of that,” he said.

But of those who bought hybrids, a majority stuck to the same brand — hybrid or not — upon returning to the market. For instance, more than 52 percent of Honda hybrid owners bought their next vehicle from the same automaker and 60 percent of Toyota hybrid owners bought another Toyota, according to Polk.

The study also found that hybrid owners in traditionally eco-friendly markets, such as Los Angeles and Portland, Ore., were no more likely to be repeat buyers than those elsewhere in the nation. Hybrid loyalty was highest in West Palm Beach, Fla., followed by Phoenix.

Low repurchase rate ‘unfortunate’

Hybrids represented 2.4 percent of the United States’ new vehicle market last year, down from a high of 2.9 percent in 2008, according to Polk.

The earthquake and tsunami in Japan, which slowed production from both Honda and Toyota, was a driving force behind the slowdown in sales, said Smith.

The Toyota Prius owns about half of the U.S. hybrid auto market, said Rebecca Lindland, research director with IHS Automotive. But with so many other hybrids available, one year of slow output should not have had such a big effect on the overall number of purchases.

“There are 28 other [hybrid] models out there to choose from,” said Lindland. “So if consumers were really adopting the hybrid technology, we would not have seen such a dramatic drop-off last year. Instead, they’re adopting the Prius lifestyle and not so much the hybrid in general.”

The low rate of return buyers is “kind of unfortunate,” she added, because today’s hybrids have better regenerative braking systems, better noise and wind management and a better overall ownership experience.

Gas prices could change things

But 2012 could be a different story.

According to data compiled by Bloomberg, electric-drive vehicles — including hybrids, plug-in hybrids and pure electric vehicles — were the fastest growing sector of the U.S. auto market in the first quarter of this year.

The Toyota Prius and General Motors Co.’s Chevrolet Volt plug-in hybrid both saw record sales in March. And with gasoline prices at around $4 per gallon, electric cars and hybrids could continue to take off.

The U.S.-based market research firm ABI Research predicts that hybrid sales could reach 11 percent of new vehicles sold globally, an increase spurred by rising fuel costs.

However, the Polk study found that fuel price volatility between 2008 and 2011 — when gasoline ranged from just under $2 to nearly $4 a gallon — had little effect on hybrid loyalty.

“You have multiple technologies competing against one another — compression gasoline engines, diesel, plug-in hybrids and electric vehicles — all competing for the customers’ wallets,” Smith said. “But with so many fuel-efficient options, as of today there’s no clear-cut winner as to what U.S. society will embrace going forward.”