Are North American car companies holding back on hybrid car and fuel effiecient vehicle production,did they underestimate demand or are they intentionally not emphasizing hybrid or fuel efficient car production?



With waiting times of several months to buy a Smart car in Canada and hybrid cars being sold as fast as they are received Ford seems more interested in producing large suburbans and other gas guzzlers despite decreasing interest in them.



Are the profit margains low on hybrids or do north american car companies have other reasons for not pursuing hybrids like Honda and Toyota are?



PFezziwig , Green Cars Now

Well, let's ask a different question. Is there more profit to be made by witholding stock so that demand outpaces supply? To a certain extent there might be. The dealers can charge more for a vehicle in high demand than a vehicle that is readily available. The company may benefit to some extent from the buzz. Consumers hear that they need to hop in line quick so they do. But I doubt that they would intentionally build cars at such a rate that there are several months of waiting time before the average consumer gets theirs. That's just irritating and probably drove potential buyers away to a different car. I don't think that there are any evil geniuses behind the supply shortage. It is more likely that they didn't anticipate being this well received. Look at what has happened with the big hybrid SUVs (slow sales) and you see what they were afraid would happen with the rest of the hybrid lineup.

If you have the chance, peruse through some of martinjlm's posts. He works for GM and has brought an incalculable amount of insught to regular readers here.

I would think that the bottleneck for mass producing hybrid cars is the batteries. I've only heard of two companies that make large-format NiMH batteries in big lots (one is Sanyo; I don't remember the other one). If the car makers suddenly said "In 2007, every car and truck will be a hybrid", it wouldn't be able to be accomplished.

Putting potential customers on a waiting list is a great way to alienate them. That's one reason I bought a HCH instead of a Prius.

Car dealers pay the manufacturer a set price (wholesale) for each car. They make their profit by selling to the consumer for more (retail). If a car is "hot," like hybrids now or the Mazda Miata when it 1st came out, dealers can charge a higher spread, occasionally even over MSRP. (Some dealers even put the premium on the window sticker with labels like "ADP" for "additional dealer profit" or "ADM" for "additional dealer markup." At least they're up front about it!) That premium is pure profit to the dealer, not the manufacturer.

This means that while retailers can benefit when demand far exceeds supply, manufacturers don't. Therefore they have an incentive to increase supply in order to increase their profits. If hybrids stay "hot" due to high gas prices, the car makers will increase production as fast as they can (except for brain-dead GM, which seems to have pinned its survival hopes on selling more SUVs).

Ford takes the poisiton that they lose money on every hybrid sold at this point. If they hit their number of 250,000 units by 2010, they should be able to make some nice profits.

The FEH/MMH product gets them some major traction in hitting EPA goals, not to mention the PR value.

They have been agressive lately about building enough vehicles, and are moving them with 0% financing.

Can't ask for much more than that.

I understood Toyota started making hybrids in 1997 and it was 2002 when they claimed to be making a profit. Ford has been making a hybrid since 2004 . . .

Bob Wilson

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In America, gas was cheap for a long time, creating a low demand for economy cars. I'm not an expert on Japanese history, but I have the general impression that gas is much more expensive there and in Europe. So they had a need to get in the game sooner - at least, they felt the market (worldwide) would support the risk they (Honda and Toyota) were taking.

I think American companies are putting hybrids in trucks and SUVs because that's their bread-and-butter. No point in putting a nitch-technology in a low-volume car. Put it in something you might sell 100K of and you could see a profit.

As for holding back, I see no financial gain in doing so. Wait lists have no upside - only a downside. I'm sure they know exactly what % of sales the loose if there are wait lists. I expect they'd do quite a bit to avoid them.

*** Retired after 65,000 outstanding miles ***

I'm in LA right now, I drove around all day in my brother's Hybrid Escape, and I swear to you it's about as common to see a Prius, HCH, or 400h at any given intersection as it is to see a Mercedes or BMW. I mean... we were driving around the Hollywood hills today, and the car I saw most often was a toyota prius.

Business case study:

You are Director of Sales for GTHF Worldwide auto company.

You have 2 Million vehicles that you can make in a given year.

50% of these vehicles make you a profit of $20000 / unit - a proven demand
25% of these vehicles make you a profit of $3000 / unit - a proven demand
20% of these vehicles make you a profit of $1000 / unit - a proven deman
5% of these are niche vehicles each of which may make you profit of $5000+; zero profit; or a loss of $3000. - the demand for these niche products may vary from year to year.

You have a VP, President, Board of Directors, and ultimately shareholders all assessing your results.

Now you are the President/CEO of the same company.

What do you think each emphasizes.

Lifetime fuel usage: 2.1 GPC ( 1.99 recent )