Power Predicts Surge in Hybrid, Diesel Sales

April 7, 2008

With $4-a-gallon gasoline seemingly just around the corner, sales of high-mileage diesels and hybrid-electric vehicles are expected to triple by the middle of the next decade, according to a new study by J.D. Power & Associates.

Power predicts the two technologies will achieve a combined 17 percent of the U.S. new car and light truck market by 2015, in part driven by the auto industry’s need to meet the recently-enacted 35-mile-per-gallon federal fuel economy mandate.

Diesels and hybrids won’t be the only way to deliver 35 mpg by 2020. The new J.D. Power study foresees a big surge in the use of four-cylinder engines. Manufacturers also are expected to turn to lighter weight materials, since lower mass generally means higher mileage.

Automakers are already seeing a shift in product mix, with a steady increase in the sale of small cars, even as big pickups and SUV lose market share. New technologies, such as Ford’s direct-injection EcoBoost engines. Are designed to permit the use of smaller, more fuel-efficient powertrains with a minimal sacrifice in performance.

Nonetheless, Power researchers caution that the transition will be an expensive proposition, averaging $4,000 to $5,000 per vehicle. Industry-wide, that could total up to as much as $85 million in added costs for the industry.

Hybrid sales are clearly on the rise, in part because of a surge in product offerings. In 2007, a total of 353,000 were sold in the States, with the Toyota Prius topping the charts. That was about 2.2 percent of the total U.S. automotive market, but Power’s studies expects the share to soar to seven percent by 2015.

Diesels, meanwhile, are expected to grow from 3.2 percent to 10 percent of the market during the same period. But some observers question whether Americans will embrace the technology, which older motorists still associate with the noisy, smelly diesels of the ‘60s and ‘70s. Even though new diesels are cleaner, quieter, smoother, and easier to operate, there’s another obstacle in the way of widespread acceptance. Fuel prices have skyrocketed, in recent months, and diesel now runs over $4-a-gallon in much of the country, in some cases nearly a dollar more than regular unleaded gasoline.

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