Hybrids face tough US arena

Carmaker Audi said the success of hybrid vehicles, which shave around a quarter from fuel costs, hinged on faster US sales growth, even though high prices at the pump mean they are enjoying rising demand. The US accounts for around 70 percent of the some 283,000 hybrid vehicles sold worldwide, compared with 21 percent in Japan and just eight percent in western Europe.

Global sales of hybrids cars have risen from around 25,000 in 2000 and 75,000 in 2003. Still, the share of hybrids in the US – by far the world's largest car market with around 16 million to 17 million cars sold every year – remains negligible at just 1.2 percent of all newly registered vehicles. An Audi official said that if the market in the US did not grow significantly faster than it had until now, then it would be fair to assume that volumes per model would remain low. It could become increasingly difficult to manufacture and sell hybrids in commercially sensible volumes.

One of the core problems facing hybrids is the complexity of integrating two powertrains in one vehicle, leading to costs that he said cannot be fully passed on to customers. The Toyota Prius dominates the US hybrid market, constituting roughly half of all new hybrids registered, while hybrid models like the Ford Escape; the Honda Civic, Accord or Insight; and even Toyota's own Highlander and Lexus RX400h lead a peripheral existence.

Apart from Prius, sales of all other hybrid models average below 15,000 units a year. Audi and parent Volkswagen are developing hybrid technology with Porsche. VW's premium unit aims to roll out a its Q7 hybrid in the US in 2008.