By John O'Dell
Senior Editor, Edmunds.com

(October 5, 2010) If policymakers and marketing strategists need more proof that in the absence of high gas prices and big incentives, most Americans don't place fuel efficiency high among reasons they select new cars, they need look no further than September's dismal hybrid sales picture.

At first glance, you might ask what the problem is — after all, hybrid sales were up 10.2 percent in September over September of 2009.

But last September was one of the worst on record, a double-slump month for passenger vehicle sales hit by both a deep recession and the end of the cash-for-clunkers program that had pulled many buyers forward into July and August.

A 10 percent increase from a really bad month isn't much to write home about — especially when you consider that sale of conventionally powered vehicles in September were 29.3 percent ahead of their September '09 performance.

September hybrid sales were down 7.2 percent from August, double the 3.5 percent drop for the month experienced by conventional vehicles.

Toyota Prius remains
top-selling hybrid

And for the first nine months of the year, hybrid sales were down 9.9 percent from the first three quarters of 2009, at 198,608 versus 220,596, while sales of conventionally powered cars and light trucks were up 10.9 percent, 8,401,797 versus 7,572,968.

While the overall market has grown, hybrids' total market share has slipped, to 2.36 percent for the first nine months versus 2.91 percent for the January-September period last year.

The one-month market share of 2.3 percent is down from 2.4 percent in August and from 2.7 percent in September '09.

The numbers just aren't very encouraging for those who've been waiting for fuel-efficient technologies to catch on.

"Until we see gas prices make some drastic moves upward, or showroom floors start displaying Leaf EVs and Volt plug-ins to create some excitement, there will be little or no movement in the advanced-drive arena," said Edmunds.com analyst Ivan Drury, noting that interest in hybrids increases in direct proportion to gas price hikes.

Incentives also can help, but except for the limited volume Nissan Altima and several of GM's big dual-mode gas-electric trucks, hybrids are among the least incentivized vehicles in the market.

In fact, small cars overall (and about 40 percent of the hybrids on the market fit into that category) haven't done well in the past year - victims of low fuel prices and heavy incentives that have made large vehicles more attractive.

The average incentive in September was $2,576, but for small cars it was only $1,122, according to Edmunds True Cost of Incentives data.

The picture may change as automakers, pushed by federal policy to achieve overall fleet fuel economy of 35.5 miles per gallon by 2016 and now looking at the possibility of a 60-62 mpg requirement by 2025, introduce more new advanced-drive and small vehicles in order to achieve the targets.

But for now, Drury said, small cars and crossovers - in the compact and subcompact classes - accounted for 20 per cent of all passenger vehicle sales in the first nine months of the year, down from 22.7 percent in the same period last year. For September alone, the small vehicle category held an 18.4 percent market share, down from 19.4 percent a year earlier.

It will be December at earliest, and more likely January of February of 2011 before EVs and plug-ins start affecting the picture.

Winners, Losers

The only new hybrid introduced in September, the Lincoln MKZ hybrid sedan, hit dealerships late in the month and, with such limited availability, only 10 were sold. Lincoln expect its only hybrid - an upscale version of the Ford Fusion hybrid, to be a low-volume car with only a few thousand sales a year at best.

Meantime, on the hybrid front, only 7 of 25 models in the market (two of the 25 are remnants of the discontinued Saturn brand's hybrid lineup) scored sales gains in September over August and only 10 posted higher sales than in September '09.

Honda's new CR-Z hybrid was the best September performer compared to August sales - a 78 percent increase to 1,236 from 694 - but the car is new and stock at dealerships is still building. Earlier sales were likely constrained by inadequate supplies, said Drury, who nevertheless said he doesn't expect to see much in the way of future increases in Cr-Z sales.

Compared to performance in September '09, the Ford Fusion Hybrid was top of the list, posting a 49.7 percent increase to 1,671 sales from 1,116.

The Fusion Hybrid was on the opposite end of the measuring stick in September versus August performance, however. Those 1,671 sales represented a 44.5 percent plunge from 3,010 sales in August, the worst drop in the segment.

In the September versus September comparison, the worst sales performance was turned in by the Lexus HS 250h, down 42.7 percent to 711 from 1,242 sales in September '09.

Toyota's Prius, the perennial segment leader with around 50 percent of all hybrid sales, easily maintained its position, but saw volume remain relatively flat, September's11,397 sales comparing to 11,799 in August and 10,984 in September 2009.

Overall, Toyota — including its Lexus brand — remained the top hybrid company with 14,871 September sales. Ford  — including Mercury — was second with 2,598, followed by Honda at 2,346; Nissan at 511 and General Motors at 450 sales spread thinly among the Chevrolet, GMC, Cadillac and defunct Saturn brands.