Rafael Reyes on Friday, 07 January 2011 23:13

Gas price, SUV sales up. Hybrids down. Briefly?

The complex interplay between gas price, the economy and vehicle purchase forms uncertain terrain for the 2011 introduction of electric vehicles.  With the economy down, gas prices declined due to reduced demand.  This in turn led those buying new cars, those less impacted by the downturn, to return to buying SUVs - even if what is likely to be a brief trend before gas climbs again.

With the end of the recession, bigger vehicles have made a comeback, sales figures show, and it has come at the expense of smaller, more-efficient cars.

Leading the growth were sales of midsize sport-utility vehicles, which jumped 41 percent through the first 11 months of the year, led by vehicles such as the Jeep Grand Cherokee and the Honda Pilot, each of which get about 18 miles per gallon.

Even in San Francisco, there has been a significant drop of in hybrid sales reports the Wall Street Journal.

According to R.L. Polk & Co., which analyzes the auto industry, new hybrid-car registrations in the San Jose-San Francisco-Oakland area have steadily declined since peaking in 2007. That year in the region, there were new 27,292 registrations of hybrid cars, which are more fuel-efficient than cars that run only on gasoline. By 2009, that number had dropped 36%, to 17,575 registrations. This year through May, there have been 6,306 registrations of hybrid cars in the Bay Area, Polk reports.

The falloff mirrors a national trend. Hit by the recession, hybrid car registrations nationwide also peaked in 2007, at 350,701, and fell around 17% to 288,952 last year, Polk says, as auto sales overall declined in the economic downturn.

But the Bay Area's hybrid-registration falloff was steeper than the nationwide drop. And the region's share of nationwide hybrid car registrations has shrunk over the past few years, with the Bay Area making up 6.1% of the overall U.S. share last year, down from 7.8% in 2007 and 8.1% in 2006, says Polk.

But San Francisco has been the epicenter of the electric vehicle rollout, most recently with the launch of the Nissan LEAF where I delivered remarks along side Nissan Americas Chairman Carlos Tavares.  Many consumers looking to fuel efficient vehicles may be waiting to step up to a plug-in vehicle instead.

More significant though in driving demand is the price of gas and with the strengthening economy, it is again starting to climb.  Especially noteworthy was the statement by the former president of Shell Oil, John Hofmeister, who stated that Americans may face $5 a gallon next year, a perspective echoed by other analysts in BusinessWeek.  The debates on price are largely focused on when the price of gas will again climb significantly, not if.  This will then have two effects, drive consumers back to more efficient vehicles, and again create a drag in the economy.