April 7, 2004

Rising gas prices may increase popularity of gas-electric hybrid vehicles

Westlake Village, California – With gas prices continuing to rise, more consumers are expected to look to vehicles with clean diesel engines or hybrid electric powertrains to provide some relief at the pump, according to the J.D. Power and Associates 2004 Consumer Acceptance of Alternative Powertrains Study released on Tuesday.

The study of 7,126 consumers who purchased a new light vehicle in the past three years, finds that more than 75 percent of respondents express an awareness of hybrid electric powertrain technology, while 40 percent indicate an awareness of clean diesel engine technology. Among respondents who own a conventional light vehicle with an internal combustion engine, 57 percent say they are “very” or “somewhat” familiar with hybrid electric powertrain technology, while 39 percent express similar familiarity with clean diesel engine technology.

Consumers express interest in clean diesel engines for their power or torque and for proven technology. Yet, they also show concern over maintenance costs and the availability of repair and service locations. In addition to the fuel savings, consumers also like hybrid electric powertrains because they feel they are better for the environment, but worry about their reliability, life of the battery pack, and performance, particularly in acceleration.

“If the average price drivers are paying for gasoline continues to steadily climb, then the clean diesel engines and hybrid electric powertrains that automakers are bringing to the market could be much more successful than skeptics, and even some proponents, expect,” said Walter McManus, executive director of global forecasting at J.D. Power and Associates.

On average, study respondents indicate that they expect the price they pay for a gallon of gas to rise by 2 percent per year. However, about one-quarter of these vehicle owners expect fuel prices to rise by 6 percent or more each year.

“The faster a consumer expects fuel prices to rise, the more likely they are to buy a vehicle with a hybrid electric powertrain or a clean diesel engine,” McManus said. “Still, most consumers want to see the up-front costs of purchasing a hybrid or clean diesel offset by the fuel savings.”

The premium for purchasing a new light vehicle with a clean diesel engine averages approximately $2,500 and the premium for a hybrid electric powertrain averages approximately $4,000, according to the study. Most consumers would have to own such vehicles several years before recovering their investment through fuel savings.

“While consumer demand for clean diesel engines exceeds demand for hybrid electric powertrains, we’re still at least two years away from the first clean diesel engines coming to market,” McManus said. “Even then, manufacturers appear to be planning fewer clean diesel-powered models than hybrids, thus clean diesel sales will lag hybrid sales for at least the next several years.”

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