Green Power Fades As Carmakers Push Hybrid Horsepower

The key reason: Horsepower sells.

Published: 18-Jan-2004

d is overtaking green on the nation's roads.

Cars and trucks with hybrid engines that have been sold on their ability to cut fuel costs will now be marketed as performance vehicles.

The key reason: Horsepower sells.

"For our customers, it's not just about being green or the fuel economy. It's about a better total package," said Denny Clements, general manager of Toyota's Lexus luxury division. "Fuel economy is not one of the 10 things they're most concerned about."

At the Detroit auto show, Toyota introduced two sport-utility vehicles with a gasoline-and-electric engine that will yield about 30 miles per gallon.

But executives bragged more about the performance of the hybrid engine than the fuel savings.

"The real story is the acceleration. It's really quick," Clements said of the Lexus RX400H SUV that goes on sale in the fall. It will have 270 horsepower, 40 more than the regular version. Clements said the extra power will be a stronger selling tool than the 33 percent fuel economy improvement.

Nissan will tell a similar story when it introduces its first U.S. hybrid, an Altima sedan due in 2005 with technology licensed by Toyota.

"The consumer wants value, not philosophy," said Carlos Ghosn, Nissan's president and chief executive.

"Hybrids deliver higher mileage and lower emissions, but when gas is $1.50 a gallon, I as a consumer don't care about fuel efficiency.

"But when I'm told the electric motor can act like a turbocharger so that the hybrid also delivers more power, the hybrid is seen as adding value," Ghosn said.

Higher fuel economy lured Batavia businessman Tom Novak to the Honda Civic Hybrid nearly two years ago.

While the fuel savings are 12 miles per gallon less than the EPA rating of 47 m.p.g., Novak said he would buy another hybrid, including an SUV.

He uses a Jeep Grand Cherokee to haul coolers, lawnmowers and other equipment to and from the Wendy's franchises he owns in the western suburbs.

The 6-cylinder Jeep gets about 16 m.p.g. in the city and 21 on the highway, which Novak said is a big improvement over his previous work vehicle, a Chevrolet van that got about 10 m.p.g.

"I probably would have bought a 4-cylinder Grand Cherokee if they had one," he said.

"If they came out with a hybrid SUV, I'd be looking at the technology. If you have to drive a larger vehicle, why not take advantage of it?" Novak said.

For Karl Scheribel, power is more important. He manages a fleet of about 25 pickups and SUVs for Bertog Landscape Co. in Northbrook. The trucks haul loads of sod, tow trailers and plow snow.

General Motors will begin selling full-size pickups this year with a "mild hybrid" system that increases fuel economy 12 percent to 15 percent.

GM says its goal was to boost the economy while maintaining the payload and towing capacities of the trucks, key attributes for buyers like Scheribel.

"A couple of more miles per gallon here and there would help, but it really comes down to dollars and cents. I'll pay more for a product initially if it's reliable and has longevity," he said, adding that he wants to see a track record first.

"I tend to shy away from vehicles in their first year of production," Scheribel said.

Toyota will stress zippiness in its hybrid Highlander SUV due in early 2005, a departure from the carmaker's practice of touting the 55-m.p.g. efficiency of its hybrid Prius.

"We're going to try to sell them on the performance benefits and surprise them when they buy gas," said Dave Hermance, Toyota's executive engineer of environmental technology.

GM won't add hybrid technology in cars until 2006, and the next year it will offer hybrid versions of its popular full-size SUVs.

"We have to offer vehicles and technology that customers want to buy," said Larry Burns, vice president of research and development.

Ford's first hybrid will be a 4-cylinder Escape SUV, due out in August. Ford says it will average 35 to 40 m.p.g. in city driving and accelerate on par with a V-6.

Ford Chairman Bill Ford Jr. still sees an uphill battle to get consumers to embrace hybrids.

"You mention hybrids and lots of people still think it means you have to plug it into your house every night, while others think it means it's a slug to drive," he said. "The opposite is true in both cases."

Among current hybrids, only the Honda Civic is based on a model with a conventional gas engine.

At $20,350, the Civic Hybrid is $2,300 more than the most-expensive conventional model, but it has more equipment. Honda sold 21,771 Civic Hybrids last year, 7 percent of the 300,000 total Civic sales.

"It's not been difficult to sell the Civic Hybrid at that volume," said Tom Elliott, executive vice president of American Honda. "If we wanted to do more volume, the price [differential] would have to be closer."

Honda's next hybrid will be an Accord sedan with a V-6 engine coming out in the fall.

Honda has not priced the hybrid, but it will be sold as "the ultimate Accord" above the $28,400 EX model. Honda expects to sell about 2,000 per month.

Elliott acknowledged that most buyers prize performance over economy, but added, "They might also pay more to get both."

Hermance said Toyota will recoup the cost of the hybrid system on its SUVs, but the full amount may not be reflected initially in the window stickers for fear it will scare off customers.

"The question is how much you internalize," he said. "There will be a price premium, but it will be positioned like an optional V-8 engine against a standard V-6."

On a $40,000 luxury model such as the RX400H, price is not as big an issue as it is on $20,000 models like the Prius or Civic, but Clements is still cautious about demand for hybrids.

"We're looking at 20 to 25 percent of the mix as an early indicator, but we'll see. As the first luxury hybrid vehicle, we have some learning to do," he said.

Lexus sold 92,000 RX330s last year, so that would mean 18,000 to 24,000 hybrid models.

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