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Hybrids and Diesels Taking Bigger Market Share

June 28, 2005
New vehicles powered by hybrid electric or clean diesel engines are expected to gain an 11 percent share of U.S. sales by 2012 -- up from 4.8 percent in 2005 -- according to a report by J.D. Power-LMC Automotive Forecasting Services.

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The report predicts that hybrids, which accounted for 0.5 percent of the U.S. market in 2004, are expected to increase to 3.5 percent market share by 2012, while diesels are expected to grow from 3 percent in 2004 to 7.5 percent.

The growth will be spurred, in part, by an increase in the number of hybrid or diesel models available. The study predicts the number of hybrid models on sale will increase from 10 this year to 44 by 2012. The number of diesel offerings is expected to swell from 14 to 26 during the same period.

High gasoline prices will be a catalyst in the increased demand for alternative powertrain vehicles, according to the forecast.

While automakers continue to design hybrids, they also are turning to diesels to help them offer more fuel-efficient alternatives. However, new U.S. Environmental Protection Agency regulations, which go into effect in 2007-2008, require cars and light-duty trucks to meet more stringent emissions standards. Diesel technology, coupled with low-sulfur fuel that will be available at gas stations next year, will have to meet these standards before these vehicles can be sold in the United States.

The price premium associated with alternative powertrain vehicles continues to be a prohibiting factor that will limit the potential for both hybrid- and diesel-powered vehicles. Manufacturers will have to reduce the premium to attract buyers who are not currently motivated to purchase these vehicles as a means to improve the environment, or as a means to save money by consuming less fuel.

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