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A Hankering for Hybrids

August 2, 2013 by

Results have, so far, fallen way short of expectations. Only about 36,000 battery-powered vehicles were sold this year through July, according to the auto research site Edmunds.com. And many of those sales were spurred by heavy discounts from car companies desperate to move electric models off the lot.

But for hybrid cars, it has been a different story. Automakers have sold about 298,000 hybrids, which alternately run on gasoline engines and battery power, so far this year.

And while electric vehicles may be considered greener and more glamorous, hybrids have quietly entered the mainstream of the American auto market.

Today, more than 40 conventional hybrid models are available, from mass-market automakers like Toyota and Ford to luxury brands like BMW and Mercedes. Hybrids account for about 3 percent of overall industry sales, with the market-leading Toyota Prius cracking the Top 10 list of best-selling passenger cars.

By contrast, automakers offer only about a dozen all-electric cars or plug-in models — which run on battery power with assistance from a gasoline engine — although more are on the way.

Industry analysts say that hybrid models are now showing up on the shopping lists of a broad range of consumers.

“Conventional hybrids are mainstream now,” said John O’Dell, the green-car editor at Edmunds. “You can envision almost anyone buying one.”

The reasons are many. Hybrids cost less than most electric models. There are no limitations on driving range based on battery power. And the technology, once seen as exotic and possibly unreliable, has been proved over time in real-world driving conditions.

One of the hybrid converts is Pandian Athirajan, an I.B.M. product manager in Austin, Tex. He had been considering buying a Prius for years before finally taking the plunge in May.

He bought the Prius to save gas and reduce vehicles emissions, but only because its hybrid system had been perfected by Toyota since it was introduced in 2000. “I wanted to buy a third-generation hybrid so that all kinks were ironed out,” Mr. Athirajan said.

For many consumers, price is the biggest factor in choosing a hybrid over a vehicle that runs primarily on battery power, though a $7,500 federal tax credit is available for plug-in models and all-electric cars.

For example, the base price for a regular, gasoline-powered Ford Fusion sedan is $21,900. The conventional hybrid version of the car goes for $26,200. But the plug-in variation costs $38,700. Faced with sluggish demand for electric vehicles, auto companies have increasingly been forced to slash prices to stimulate demand. Ford, for example, recently cut $4,000 from the price of its all-electric Focus.

Manufacturers are also fighting an uphill battle to win over consumers worried about the distances they can travel before recharging an a purely electric car.

That was one reason Mr. Athirajan chose a hybrid. Even though his hometown has several public charging stations, including one at his local Walmart, Mr. Athirajan was concerned about making the 300-mile drive to Houston twice a month to visit his daughter.

Mr. Athirajan said he was prepared to look into buying an electric vehicle in three or four years but that he thought the electric technology still needed to mature. He also said that four to six hours to charge the battery was too long.

“Most of the E.V. cars give anywhere between 75 to 125 miles between charge,” Mr. Athirajan said. “It will be O.K. for weekday office trips but not O.K. for weekend shopping and other trips, and definitely not suitable for my weekend trips to Houston.”

Article source: http://www.nytimes.com/2013/08/03/business/a-hankering-for-hybrids.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Trucks Help Detroit Carmakers Post a Strong April

May 1, 2013 by Leave a Comment

DETROIT — American automakers said Wednesday that sales of pickup trucks rose sharply in April because of a revival in the housing market and increased demand from the oil and gas industry.

The increase in truck sales fueled double-digit sales growth at all three Detroit automakers and kept the industry on track to sell more than 15 million vehicles this year.

Auto analysts said the overall industry sold about 1.3 million new vehicles during April, a 10-percent improvement over the same month a year ago. It was the best April performance since 2007 and another indication that sales of new cars and trucks in the United States were returning to pre-recession levels.

“As long as automakers keep reporting their best sales in at least five years, we’ll continue to be in good shape,” said Jessica Caldwell, an analyst with the auto-research site Edmunds.com.

Auto executives said pickup sales grew three times as much as the overall market during the month and were a direct result of improved housing starts and strong demand for trucks by the energy sector.

The biggest beneficiary was the Ford Motor Company, the second-largest American automaker, which reported it sold 212,000 vehicles during the month, an 18-percent gain from a year ago.

Ford, which recently reported record first-quarter profits in North America, said sales of its F-Series pickup increased 24 percent in April to 59,000 vehicles.

“F-Series continues to lead the pace in the truck industry,” said Ken Czubay, Ford’s head of sales and marketing in the United States. “We are building as many as we can.”

Ford reported impressive gains across its lineup, with sales of the Escape S.U.V. up by 52 percent and the Fusion sedan up 24 percent. Even its struggling Lincoln luxury brand had a 20-percent improvement because of strong sales of the new MKZ sedan.

General Motors, the largest of the domestic automakers, said it sold 237,000 vehicles during April, an 11-percent improvement from a year ago. Cadillac had the best performance of G.M.’s four brands, recording a 34-percent gain primarily from sales of its new ATS compact sedan and large XTS model. G.M. also reported big gains on the truck side, as sales of its Chevrolet Silverado pickup increased 28 percent to 39,000 vehicles.

Chrysler, the smallest of the Detroit companies, said it sold 156,000 new vehicles during April, an 11-percent increase from a year ago and its 37th consecutive month of year-over-year sales gains. The Ram pickup led the way with a 49-percent gain from a year ago. Chrysler also enjoyed strong performances by its profitable S.U.V. models, with sales of the Dodge Durango up 65 percent and the new Jeep Grand Cherokee up 27 percent.

All three Detroit automakers gained market share during April and should sustain that momentum with new products arriving this summer.

Among Japanese automakers, growth has slowed since their big comeback last year from inventory problems associated with the earthquake and tsunami in Japan in 2011. Toyota, the largest Japanese auto company, said its United States sales fell 1 percent during April. The company is preparing to bring out several new models, including fresh versions of it Lexus luxury cars.

Of the European automakers, Volkswagen reported that it sold 33,000 new vehicles during the month, which was a 10-percent improvement from a year ago. VW is rapidly expanding in the United States and relying on North American results to compensate for weaker sales in the sliding European market.

Article source: http://www.nytimes.com/2013/05/02/business/trucks-help-detroit-carmakers-post-a-strong-april.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

Detroit’s Rebound Is Built on Smaller Cars

May 30, 2011 by Leave a Comment

By refocusing on small cars and de-emphasizing the gas-guzzlers that had long sustained the industry, General Motors and Ford in particular are preserving jobs and positioning themselves to prosper. Their efforts are already paying off in the marketplace. Ford’s tiny Fiesta is the best-selling subcompact in the United States this year, and G.M.’s Chevrolet Cruze outsold every other compact car in America last month except the segment-leading Honda Civic.

Nearly one in four vehicles sold in the United States in April was a compact or subcompact car, compared with one in eight a decade ago. Of the small cars sold in April, about 27 percent were American models, compared with 20 percent a year earlier. Data on sales in May will be released on Wednesday.

“There is a less-is-more mentality,” said Jeremy Anwyl, chief executive of the auto research site Edmunds.com. “The market demand and receptivity for these vehicles just didn’t exist four or five years ago.”

The transformation in Detroit was sparked by the worst financial crisis in generations, but was also assisted by an unusual set of circumstances.

The United Auto Workers made steep concessions on wages and benefits. The Obama administration used the opportunity of the bankruptcies of G.M. and Chrysler to prod them on fuel efficiency. Japanese carmakers like Toyota and Honda became complacent about their frontrunner status. And the psychology of the American car buyer underwent a stunning change.

“The most important thing we had to do was restore our reputation as a fuel-economy company,” said James D. Farley Jr., Ford’s head of global sales and marketing. “Without that, we couldn’t get a wide group of people to even consider these new products.”

After decades of turning out embarrassingly uncompetitive small cars like the Chevy Vega and Ford Pinto that rarely contributed to their bottom lines, G.M. and Ford have devoted their vast global resources to producing new models that are both fuel-conscious and laden with technology and attractive features. Chrysler, the smallest of the Detroit car companies, has been slower to make the changes, but with the help of its Italian partner Fiat it is headed in the same direction, with a new compact model expected next year.

The emphasis on smaller vehicles has proven to be a necessity for the recovering auto companies. Rising fuel prices have prompted a steady migration away from bigger vehicles since the spring of 2008, when gas hit $3.50 a gallon. Industry analysts and company executives say the shift is likely a permanent one, as consumers flock to small cars packed with features like heated leather seats, Internet access and voice-activated entertainment systems.

With every new small car sold, the acceptance of American brands is reinforced as automakers erase the bad memories of their cheap and unappealing “econo-boxes” of the past.

“This car has changed my impression of Detroit, big time,” said Christopher L. Garcia-Rivera of Northborough, Mass., who averages nearly 40 miles to the gallon in the Ford Fiesta he bought for $14,900 in April.

The signs of change are apparent everywhere in the industry’s home state of Michigan, where Ford has converted a former S.U.V. plant to build small cars that will be available in hybrid and electric versions, and G.M. is preparing to make the first subcompact model it has ever produced in the United States.

Ford got a head start on its small-car push when it hired an outsider, Alan R. Mulally from Boeing, to reorganize its operations five years ago. G.M., however, had to go through bankruptcy in 2009 before it could shed its big-truck mentality.

“We focused our resources where the market was before,” said Mark L. Reuss, president of G.M. North America. “You have got to spend money to do great small cars.”

The dominance of the Japanese small car has eroded, in part, because Toyota and others didn’t consistently update their models in recent years. “Toyota really dropped the ball with their bland styling and plastic interiors,” said John Menschede, a retired county assessor in High Ridge, Mo., who paid $19,700 for a Cruze with a turbo-charged engine and Bluetooth wireless communication equipment. “I wanted something with a lot of bells and whistles and that’s what I got.”

Still, foreign cars continue to give Detroit stiff competition. The Korean carmaker Hyundai has introduced well-received models, and Honda recently started selling a new version of the Civic, the perennial market leader. But instead of a few Japanese models grabbing the bulk of the sales, the compact-car segment is now a wide open field.

John W. Mendel, Honda’s top American sales executive, said the Japanese carmaker was confident that its small cars would meet the challenge from the latest American models. “Better products from our competitors?” said Mr. Mendel. “That’s a good thing for the U.S. marketplace, but the Civic remains the trendsetter.”

In the past, Detroit automakers neglected small cars because they could not make money on them. That has changed for several reasons. Labor costs are lower since the U.A.W. agreed to concessions on health care for retirees and a 50 percent wage reduction for new workers. G.M. and Ford are also spreading the development costs of compact and subcompact cars across their global divisions in North America, Europe and Asia.

Ford is building variations of its new Focus at factories across the world. The car’s basic design and engineering, however, was done in Europe, where consumers have long appreciated the value, fuel efficiency and performance of smaller models. “The way we work now is to use the teams that know the markets the best,” said Derrick M. Kuzak, Ford’s global product chief.

The companies still earn far bigger profits on trucks and S.U.V.’s. But small cars are now commanding better prices in the showroom. A year ago, G.M.’s previous small sedan, the Chevrolet Cobalt, sold for an average price of $18,400, according to TrueCar.com. Last month, however, the typical Cruze sold for $20,600.

Detroit executives are aware they still have a lot to prove. Mr. Reuss cringes when reminded of some of G.M.’s subpar products of the past, and vows never to repeat those mistakes. “Our company has been changed forever,” he said. “We’ve got a window to get it right this time.”

He knew G.M. was on the right track when he parked one of the first new Cruzes off the assembly line at a supermarket in suburban Detroit, and a store employee rushed over to check it out. “She said, ‘I can’t believe Chevrolet is building a car this size that’s this good,’ ” Mr. Reuss said.

Article source: http://www.nytimes.com/2011/05/30/business/economy/30auto.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Making Rebound, Detroit Focuses on Smaller Cars

May 30, 2011 by Leave a Comment

By refocusing on small cars and de-emphasizing the gas-guzzlers that had long sustained the industry, General Motors and Ford in particular are preserving jobs and positioning themselves to prosper. Their efforts are already paying off in the marketplace. Ford’s tiny Fiesta is the best-selling subcompact in the United States this year, and G.M.’s Chevrolet Cruze outsold every other compact car in America last month except the segment-leading Honda Civic.

Nearly one in four vehicles sold in the United States in April was a compact or subcompact car, compared with one in eight a decade ago. Of the small cars sold in April, about 27 percent were American models, compared with 20 percent a year earlier. Data on sales in May will be released on Wednesday.

“There is a less-is-more mentality,” said Jeremy Anwyl, chief executive of the auto research site Edmunds.com. “The market demand and receptivity for these vehicles just didn’t exist four or five years ago.”

The transformation in Detroit was sparked by the worst financial crisis in generations, but was also assisted by an unusual set of circumstances.

The United Auto Workers made steep concessions on wages and benefits. The Obama administration used the opportunity of the bankruptcies of G.M. and Chrysler to prod them on fuel efficiency. Japanese carmakers like Toyota and Honda became complacent about their frontrunner status. And the psychology of the American car buyer underwent a stunning change.

“The most important thing we had to do was restore our reputation as a fuel-economy company,” said James D. Farley Jr., Ford’s head of global sales and marketing. “Without that, we couldn’t get a wide group of people to even consider these new products.”

After decades of turning out embarrassingly uncompetitive small cars like the Chevy Vega and Ford Pinto that rarely contributed to their bottom lines, G.M. and Ford have devoted their vast global resources to producing new models that are both fuel-conscious and laden with technology and attractive features. Chrysler, the smallest of the Detroit car companies, has been slower to make the changes, but with the help of its Italian partner Fiat it is headed in the same direction, with a new compact model expected next year.

The emphasis on smaller vehicles has proven to be a necessity for the recovering auto companies. Rising fuel prices have prompted a steady migration away from bigger vehicles since the spring of 2008, when gas hit $3.50 a gallon. Industry analysts and company executives say the shift is likely a permanent one, as consumers flock to small cars packed with features like heated leather seats, Internet access and voice-activated entertainment systems.

With every new small car sold, the acceptance of American brands is reinforced as automakers erase the bad memories of their cheap and unappealing “econo-boxes” of the past.

“This car has changed my impression of Detroit, big time,” said Christopher L. Garcia-Rivera of Northborough, Mass., who averages nearly 40 miles to the gallon in the Ford Fiesta he bought for $14,900 in April.

The signs of change are apparent everywhere in the industry’s home state of Michigan, where Ford has converted a former S.U.V. plant to build small cars that will be available in hybrid and electric versions, and G.M. is preparing to make the first subcompact model it has ever produced in the United States.

Ford got a head start on its small-car push when it hired an outsider, Alan R. Mulally from Boeing, to reorganize its operations five years ago. G.M., however, had to go through bankruptcy in 2009 before it could shed its big-truck mentality.

“We focused our resources where the market was before,” said Mark L. Reuss, president of G.M. North America. “You have got to spend money to do great small cars.”

The dominance of the Japanese small car has eroded, in part, because Toyota and others didn’t consistently update their models in recent years. “Toyota really dropped the ball with their bland styling and plastic interiors,” said John Menschede, a retired county assessor in High Ridge, Mo., who paid $19,700 for a Cruze with a turbo-charged engine and Bluetooth wireless communication equipment. “I wanted something with a lot of bells and whistles and that’s what I got.”

Still, foreign cars continue to give Detroit stiff competition. The Korean carmaker Hyundai has introduced well-received models, and Honda recently started selling a new version of the Civic, the perennial market leader. But instead of a few Japanese models grabbing the bulk of the sales, the compact-car segment is now a wide open field.

John W. Mendel, Honda’s top American sales executive, said the Japanese carmaker was confident that its small cars would meet the challenge from the latest American models. “Better products from our competitors?” said Mr. Mendel. “That’s a good thing for the U.S. marketplace, but the Civic remains the trendsetter.”

In the past, Detroit automakers neglected small cars because they could not make money on them. That has changed for several reasons. Labor costs are lower since the U.A.W. agreed to concessions on health care for retirees and a 50 percent wage reduction for new workers. G.M. and Ford are also spreading the development costs of compact and subcompact cars across their global divisions in North America, Europe and Asia.

Ford is building variations of its new Focus at factories across the world. The car’s basic design and engineering, however, was done in Europe, where consumers have long appreciated the value, fuel efficiency and performance of smaller models. “The way we work now is to use the teams that know the markets the best,” said Derrick M. Kuzak, Ford’s global product chief.

The companies still earn far bigger profits on trucks and S.U.V.’s. But small cars are now commanding better prices in the showroom. A year ago, G.M.’s previous small sedan, the Chevrolet Cobalt, sold for an average price of $18,400, according to TrueCar.com. Last month, however, the typical Cruze sold for $20,600.

Detroit executives are aware they still have a lot to prove. Mr. Reuss cringes when reminded of some of G.M.’s subpar products of the past, and vows never to repeat those mistakes. “Our company has been changed forever,” he said. “We’ve got a window to get it right this time.”

He knew G.M. was on the right track when he parked one of the first new Cruzes off the assembly line at a supermarket in suburban Detroit, and a store employee rushed over to check it out. “She said, ‘I can’t believe Chevrolet is building a car this size that’s this good,’ ” Mr. Reuss said.

Article source: http://www.nytimes.com/2011/05/30/business/economy/30auto.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,