October 28, 2003

Hybrid vehicle sales may be slower than expected – J.D. Power and Associates

Westlake Village, California – Hybrid electric vehicle sales expectations are lowering due to changes in some automakers’ plans, which is contributing to higher-than-expected vehicle costs, according to the J.D. Power and Associates 2003 Hybrid Electric Vehicle Outlook(Third Quarter) released on Monday.

Some automakers have revised their plans to produce hybrid electric vehicles, with many delaying the release of some hybrid vehicle models or dropping models from their hybrid program altogether. In addition, the price premium charged to consumers for a hybrid powertrain option is expected to be higher over the next several years than previously expected. With these two factors combined, J.D. Power and Associates expects U.S. consumers to purchase approximately 350,000 hybrid vehicles annually by 2008, down from previous expectations of 500,000.

“The hybrid-electric vehicle market has undergone some significant changes over the past several years, and those changes have caused many of the manufacturers to adopt a wait-and-see approach,” said Walter McManus, executive director of global forecasting at J.D. Power and Associates. “Hybrid electric vehicles are still a growing portion of the market, but their share is rising at a slower rate than we previously expected. Higher-than-expected initial retail prices will slow sales growth, and slower sales growth will keep prices high.”

Hybrid sales are expected to reach 40,000 units in 2003 with only three hybrid electric models currently on the market. However, manufacturers are preparing to introduce a dozen new hybrid electric models over the next two years, and hybrid sales are expected to exceed 177,000 by 2005. A total of 28 models

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