Auto execs say alternative, hybrid vehicle sales set to soar
By Michael Cowden, American Metal Market
January 10, 2008
YPSILANTI, Mich. -- Sales of hybrid vehicles should soar in coming years as buyers shy away from thirsty, metal-gobbling pickup trucks and sport utility vehicles (SUVs), according to a recent survey of auto industry executives.
Many executives predict sales of alternative fuel and hybrid vehicles could top 800,000 units in 2008, about 45 percent higher than the roughly 500,000 to 600,000 units sold in 2007, according to the Detroit office of consulting and accounting firm KPMG LLC. Some 32 percent of respondents believe sales of hybrids will hold even with current levels.
Most industry executives missed the mark in 2006, with only 17 percent predicting that hybrid sales would top 500,000 units in 2007, according to KPMG, which surveyed more than 100 senior executives at vehicle manufacturers and suppliers in Europe, North America, Asia and elsewhere.
Most participants in the latest survey predict increases in sales of low-cost cars and crossover vehicles, with about half expecting declines in SUVs and large pickup trucks. With expected increases in hybrid sales, executives also listed alternative fuels as one of the industry's top increases. Most think that hybrid and fuel cell innovations will be critical in the years ahead.
Executives also expect investment in China to boom, with Chinese sales equaling U.S. sales within the next five years. They also think that China will be selling "a significant number" of cars in the United States within the next decade. Nearly half of those surveyed believe that Chinese overcapacity could become a problem within five years.
Safety and quality continue to be top concerns for automakers and consumers, the survey said. "The industry knows where it is and knows where needs to be," Daron Gifford, national automotive leader for KPMG, said in statement. "It needs to produce quality vehicles that are fuel efficient, especially in this economic cycle, and needs to invest heavily in developing alternative sources of power. We found the executives in our survey more optimistic than past years, and that's largely because the landscape before them is clearer on the direction they need to go."
About 353,500 hybrid vehicles were sold in the United States last year, up 39 percent from 2006, according to Mike Omotoso, senior manager of global powertrain forecasting at J.D. Power & Associates, West Lake Forest, Calif. And that trend should continue, he added. "All the manufacturers are getting into the hybrid market now. It's not just dominated by Toyota (Motor Corp.) and Honda (Motor Co. Ltd.). And if gas is going to stay above $3 a gallon, more people are going to be conscious of fuel economy."
Rising hybrid sales also means increased use of nickel metal-hydride batteries, Omotoso said. But increased sales of the batteries won't necessarily help U.S. suppliers, at least not in the short term. Ford Motor Co., Dearborn, Mich., for example, licenses its hybrid technologies from Japanese automaker Toyota.
But more and more domestic suppliers are working to develop lithium ion batteries, which are expected to be used for plug-in hybrids in the future, he said.
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