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Demand for Hybrids Rise, But Sales Plunge

June 12, 2008

With customer demand for hybrids surging, several automakers are struggling to produce enough hybrid cars to meet the need, causing sales of many hybrid models to drop in May, according to the Detroit Free Press.

Throughout the nation, auto dealers can’t get their hands on enough hybrids to meet soaring customer interest. It’s an availability problem of the automakers, including Toyota Motor Corp., General Motors Corp. and Ford Motor Co.

Chad Ratliff, general sales manager for Mike Fox Toyota in Rochester Hills, Mich., said his dealership has about a four- to five-month wait on the Prius Hybrid and about a three-month wait on the Camry Hybrid.

The Prius has experienced the greatest availability drop. Toyota said the week of June 2 that sales of the Prius declined 37.5 percent, to 15,011, compared with 24,009 in May 2007. Also, sales of its Camry Hybrid sank 12.5 percent, to 5,999. That’s in stark contrast to April, when Prius sales increased 61 percent and Camry Hybrid sales rose 51 percent.

Perhaps the biggest factor is that Toyota and its suppliers were unable to make enough batteries and other hybrid component systems to meet rising global demand.

To meet demand, Toyota is building a battery plant in Kosai, in central Shizuoka Prefecture, to produce nickel-metal hydride batteries. On June 10, Toyota announced plans to begin producing the Camry Hybrid in Thailand in 2009 and in Australia in 2010. Toyota is planning to ramp up hybrid battery production in Japan and is also considering production of the Prius in the United States.

But despite reports in Japan that Toyota is considering assembly of the Prius in the Fremont, Calif., plant it co-owns with GM, Toyota said that is just one possibility among many.

Ford and GM also saw hybrid vehicle sales drop in May. Ford reported that sales for its Escape Hybrid dropped 20.2 percent, to 2,139, and its Mercury Mariner Hybrid dropped 55.2 percent, to 239. GM faced a battery recall that disrupted production of batteries for its Saturn Vue and Saturn Aura hybrids. The recall forced GM to use batteries intended for this year’s models to replace those in the 2007 models.

But even with the industry’s battery-availability issues, J.D. Power and Associates said hybrid vehicle sales are still expected to grow this year, while sales of most segments fall, according to the Detroit Free Press.

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