Why are Toyota Prius sales down?

Toyota Prius sales are down more than 15 percent compared to last year, despite great deals and relatively high gas prices in hot hybrid markets such as California.

Hybrids. All about California?

What's the problem with the king of hybrid cars?

Compared to last year, Toyota Prius sales are down more than 15 percent. Why?

Is it the depressed California auto market still reeling from massive losses in property values? Are buyers simply waiting for plug-in vehicles? Is it gas prices? The recall scandal? All of the above?

Not long ago I heard an auto analyst claim that California auto sales have improved from “horrible to bad”. Since a majority of hybrid cars are sold in the golden state, a drop in hybrid sales isn't that surprising. Nonetheless, gas is still averaging $3.51 in the West – almost 75 cents higher than the national average. Coupled with some of the best hybrid deals ever, especially on the Prius, shouldn't sales be rising, or at least holding their own in California?

Recently, some have argued on this blog that consumers are waiting for plug-in vehicles. Really? Last I heard there were only 10,000 people with $100 deposits on the Nissan Leaf. Likewise, GM has made it quite clear that Volt sales will be very limited by supply for at least the next few years. Can plug-in demand really be behind the lack of Prius interest – and hybrid car interest overall?

Then, of course, there's the Toyota recall scandal; however, Prius sales haven't tanked nearly as much as many other hybrid brands. So, a decline in Prius sales is certainly about more than just the recall scandal.

Ultimately, the decline in Prius sales is probably a mixture of all of the above, and even more variables.

The Future

So, what does the decline in Prius sales indicate for the future of hybrid cars and plug-in vehicles?

In recent months both Ford and Toyota have made very bullish forecasts for future hybrid sales, such as at least 20 percent hybrid by 2020. Likewise, Nissan has claimed as much as 10 percent EV by 2020, and the government has claimed 50 percent battery powered penetration by 2030.

What changes so dramatically in the next few years that we achieve such high levels of penetration when after a decade hybrids still can't overcome even 3 percent penetration?

Certainly, it's easy to claim that much cheaper battery prices are around the corner, and/or that much higher gas prices are inevitable since both assertions are probably true, at least to some extent.

Nevertheless, commodity prices will limit the downside cost potential of lithium technology at a price that will still be very hard to compete with gasoline and ever more efficient internal combustion engines, suggests a plethora of research. Higher gas prices, on the other hand, would mean consumers have less money to spend up front on transportation according to the studies. Thus, consumers would have to downsize into cheaper and cheaper vehicles rather than hybrids and plug-ins and their greater upfront costs.

In fact, to some extent, that is exactly what has happened since the recession and gas spike. Consumers have downsized into more efficient vehicles, but they have not converted into hybrid vehicles. And with the greater costs and limitations of plug-in vehicles, can a mass exodus from gas vehicles into plug-in vehicles really be expected?

The Toyota Prius has now been on the road for more than a decade. During that time, according to Consumer Reports, JD Power, etc., the Prius has been one of the most reliable and most repeat-buyer-coveted vehicles available. Additionally, many Prius hybrids with old battery packs – less technologically advanced – have survived not just 10 years, but hundreds of thousands of miles without a battery pack replacement. Therefore, newer NiMH-powered hybrids should have even longer life spans. Regardless, in terms of life span, the Prius has proven itself.

Ultimately, the Prius is an exceptionally efficient and likable vehicle, especially for urban commuters – a group of drivers that represents far more than just 2-3 percent of American commuters. And, today, the Prius deals are even better. More important, compared to the 2008 gas spike, for example, Prius buyers are today literally saving several thousand dollars up front on their purchase. (How much gas does several thousand dollars buy for a Prius driver, even at $5.00 per gallon?)

So, seriously, why are Toyota Prius sales down if the battery is on the brink of revolutionizing the auto industry? Where's the disconnect?

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