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Bankrate's 2007 New Car Guide
Going green
Environmental concerns are bringing major changes -- right down to the cars we drive.
Going green
The lowdown on hybrids

After seven years on the U.S. auto market, hybrid gas-electric vehicles have gone from being merely an environmentalist's political statement to a legitimate option for mainstream car buyers.

And analysts think the hyperefficient cars have only just begun their push onto America's highways.

"They really are leaving the niche market and coming into the mainstream," says Kevin Riddell, automotive analyst for J.D. Power and Associates.

The facts on hybrids
The typical buyer
Under the hood
The Accord experiment
Dollars and cents
Battery worries

According to Power's Automotive Forecasting Services Hybrid-Electric Vehicle Outlook, annual hybrid vehicle sales are expected to more than triple by 2012 to 780,000 expected sales. Supporting that prediction, hybrids enjoyed a psychological victory in June when Toyota sold a record 27,000 Prius hybrids in the month, a 76 percent increase over June of last year, and more than in any previous month to date.

But, before you start to think hybrids are taking over the road, it might help to get some perspective. Automakers sold more than 1.6 million vehicles in June, meaning the Prius commanded only about 1.5 percent of auto sales that month. And even if the J.D. Power and Associates prediction came true today, that would mean the total hybrid market still would only account for about 5 percent of total auto sales.

"So, I guess it depends on your definition of what mainstream is," says Philip Reed, consumer advice editor for automotive resource Edmunds.com. "If you just look at the sales numbers, you might say this isn't mainstream. But what is significant is that everyone is now aware of hybrids, and everyone talks about them, even if they aren't actually buying them. Hybrids' biggest contribution is that they have raised the discussion of fuel economy on a national level."

So, what makes analysts think demand for the efficient vehicles is about to spike?

Well, for one, supply appears to have finally caught up with demand for the top-selling hybrid model, the Prius.

"Early on, buyers were paying the sticker price, and then a premium on top of that because Toyota just couldn't keep up with demand," Reed says. But with Toyota ramping up production, that is no longer the case, he says. Now, when buyers head to a car lot wanting to buy a Prius, they can leave with a car instead of a spot on a waiting list.

Another factor in play that will push more sales, Riddell says, is that there are more hybrid options than ever on the showroom floor. When they debuted in the United States in 1999 and 2000, the only hybrid options were the Honda Insight and the Toyota Prius. And until very recently, buying a hybrid meant buying a small sedan, a choice most U.S. car buyers don't typically make.

That's not the case today. Car buyers in the 2008 model year can choose between a host of hybrid sedans, sport utility vehicles and even pickups.

"And with more hybrids and more competition, that certainly will help drive up sales," Riddell says.

And with no end in sight for high gas prices, nobody is predicting a slowdown in demand for fuel efficient cars.

-- Posted: Aug. 2, 2007
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