Hybrid sales, led by Prius, up 38 percent in ’07

updated 1:26 p.m. ET April 21, 2008

DETROIT - Kim Fenske drives a bus in Colorado by day, but when he’s not working, he zooms around the mountains in a 2007 Toyota Prius.

Fenske, an attorney by training who has also worked as a forest ranger, was an environmentalist long before hybrid cars like the Prius hit the market. In the early 1990s, he ran unsuccessfully for the Wisconsin state legislature on a renewable energy platform.

But he recently decided to go one step further and make an environmental statement with his car.

“My decision is a very political decision. I want to get people in this country off their dependency on foreign oil,” said Fenske, 48, who lives at the Copper Mountain ski resort near Frisco.

A growing number of buyers feel like Fenske. U.S. registrations of new hybrid vehicles rose 38 percent in 2007 to a record 350,289, according to data to be released Monday by R.L. Polk & Co., a Southfield-based automotive marketing and research company.

Hybrids made up just 2.2 percent of the U.S. market share for the year, but they were growing steadily even as overall sales declined 3 percent.

Lonnie Miller, director of industry analysis at Polk, said rising gas prices may affect some buyers, but they’re not the main driver of hybrid sales. Instead, he thinks sales jumped in 2007 because buyers had more options, including the new Nissan Altima, Saturn Aura and Lexus LS600h hybrid sedans and hybrid versions of the Chevrolet Tahoe, GMC Yukon and Mazda Tribute sport utility vehicles.

“The gas price thing is a constant that is keeping consideration in their minds,” Miller said.

Another important factor is that hybrids have been on the market long enough for consumers to trust the technology, Miller said. The Prius, the second mass-market hybrid after the Honda Insight, went on sale in the U.S. in 2000.

The Prius remained the best-selling hybrid in 2007, commanding 51 percent of the hybrid market, up from 43 percent in 2006 despite the influx of new hybrids.

Fenske’s previous vehicle was a van, which he bought to move his belongings from the Midwest to Colorado. But Miller said most buyers appear to stay within the segment they were in previously when they opt for a new hybrid. For example, more than half of those who bought the Lexus LS600h had a previous vehicle in the luxury segment. Miller said that’s why it’s important for automakers to have hybrid SUVs, even though some drivers like Fenske argue that big hybrids don’t save enough fuel.

Green states Top 10 states for new hybrid registrations in 2007 and their share of total U.S. hybrid sales. 1. California, 26.1 percent 2. Florida, 5.5 3. New York, 5.0 4. Texas, 4.9 5. Washington, 3.7 6. Illinois, 3.7 7. Virginia, 3.4 8. Pennsylvania, 3.2 9. Massachusetts, 2.8 10. New Jersey, 2.8 Source: R.L. Polk & Co.

“It’s a good call on automakers’ parts to not make their hybrids so funky and out of body style than what’s already out there,” Miller said. “People have requirements for what they need.”

California remained the top state for hybrid sales in 2007. Twenty-six percent of all hybrid registrations were in California, up 35 percent from 2006. Florida, New York, Texas and Washington followed.

Miller forecasts more of the same this year, despite warnings from automakers that U.S. car sales could be at their slowest pace in more than a decade due to high gas prices and the weak economy. Miller predicts hybrid sales will rise 30 percent or more.

“This segment has still outpaced what the rest of the industry has done. I can’t see the hybrid category totally chilling out,” Miller said.

Fenske, who closely monitors hybrid discussions groups on Web sites like Edmunds.com, hopes more people will do the research and the math he did and buy a hybrid car. He figures he’s saving $3,000 per year in maintenance compared to his old vehicle, plus $2,000 to $3,000 per year in fuel costs for his 20-minute commute. He says he gets around 48 miles per gallon.

Fenske said he waited several years to buy a hybrid because he wanted to make sure the technology was proven. Then, he was concerned about how the little car would perform in the mountains. He has had to make some compromises; he can’t drive up some rough roads, but he has decided to hike or bike instead. But for the most part, the car has exceeded his expectations.

“Last night, I drove back from a union meeting in the middle of a blizzard and I had no traction problems at all,” he said. “I was passing SUVs in the ditch left and right.”

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