Hybrids: Wait and see

Jan. 1, 2020
Higher gas prices are driving hybrid sales, but the aftermarket remains skeptical of the future for these parts.
Original equipment suppliers have brokered deals with carmakers to withhold specialized hybrid parts from the aftermarket until new vehicle warranties end. Couple that with the fact the aftermarket is just beginning to ramp up its hybrid training and services, and it’s likely the industry will not see major benefits from the hybrid sales boom for a couple years.

Discussions of booming hybrid sales have been all the rage in the mainstream media since gas prices topped the $2 per gallon mark earlier this year. Consumers looking to save on fuel costs are hitting the dealerships in search of these vehicles, and long waiting lists –– a couple months in some cases –– are not uncommon.

Hybrid sales have increased more than 570 percent since their introduction in 2000 with a compound annual growth rate of 88.6 percent, according R. L. Polk & Co. research. Most of these vehicles remain under warranty. Honda and Toyota, the carmakers with the greatest number of hybrids on the road, have done a good job training customers to return to the dealerships for repairs or maintenance.

This category is relatively new, thus far untested and quite possibly dependent on gasoline costs remaining high — with the aftermarket just beginning to get on board with hybrid training and service offerings. There are considerable doubts within the aftermarket over whether hybrids will generate enough sales to become a viable category within the next few years. A wait-and-see attitude seems common.

“It’s certainly an immature market at this point,” according to Dan Freeman, president and CEO of the program group Automotive Parts Associates, Inc. APA membership is essentially ceding hybrid work to dealer warranties and OEM parts. “They can control the aftermarket for a while,” says Freeman. “We don’t see the need today. [Members] are not going to see hybrids in their customers’ bays for several years.”

Freeman points also to a dearth of hybrid aftermarket add-ons and replacements. “A lot of that stuff is hard to reverse-engineer, and you don’t know what’s selling yet — what products wear out,” he says. In his view, diesel engines may ultimately become more popular than hybrids.

While Freeman and others are skeptical, some aftermarket businesses are taking steps to gain knowledge necessary to work on hybrids and advertise their expertise in this field. In addition, there are routine maintenance services that traditional aftermarket shops can provide for hybrid drivers.

“The similarities are much closer than the differences,” says Bradley Berman, webmaster for the hybridcars.com Internet site. “An oil change is the same for any other car.”

Noting that the battery packs and other specialized hybrid components seem to be holding up well for the hybrids now on the road, Berman observes that “they can be taken to any service center for the type of maintenance people need. The aftermarket needs to support them.”

Intimidation factor

There is a burgeoning quest for aftermarket hybrid instruction, according to Craig Van Batenburg, president of the Automotive Career Development Center (ACDC) of Worcester, Mass.

“My hybrid training is going fast and furious,” Van Batenburg reports. “The interest in hybrids has gone from a little six months ago to a lot now.”

An 8-hour ACDC class can get a technician or business owner up to hybrid speed. “They can hang a shingle out and say, ‘We service hybrid vehicles,’ and mean it,” Van Batenburg says.

An intimidation factor is in play, as potential hybrid technicians typically “come in the door afraid” of the high-voltage and seemingly complicated components. “This is just more computers and more technologies,” he assures recruits. “The difference is the high voltage and alternating current. The myth is that these cars are so complicated and so dangerous, and that you need a lot of special tools. And that’s just not true.”

Van Batenburg cautions techs to watch out for the orange wires, though, as these cables pack enough AC power to electrocute someone unfamiliar with standard de-powering procedures.

First responders are especially concerned, with fire and police departments nationwide seeking adequate education for on-the-scene crash personnel using “Jaws of Life” and other rescue tools. Adding to the demand for training was an erroneous wire service report that said the extra-hot orange wires wend their way through a vehicle’s doors. They do not. They are, in fact, shielded from casual contact inside the frame rail. Danger does lurk for the untrained as these vehicles pack some 300 volts of juice, he says.

Van Batenburg conducts numerous classes for vocational instructors at the secondary and trade school levels. “The goal is to reach 17-year-olds, because they are the ones who will be working on hybrids,” he says.

Carmakers are restricting their hybrid training sessions to dealer technicians only, and widespread aftermarket programs have yet to hit industry-specific classrooms in appreciable numbers.

“There is little demand for them because they’re not really on the streets yet,” says Tom Mettner, president of the Council of Automotive Trainers. (CAAT), an association of instructional firms and other industry members.

“Not until there’s a need will they respond to training,” Mettner says of aftermarket repair shop owners. “It’s hard enough to get them to come to training for the cars on the road now.”

In Massachusetts, Van Batenburg and his wife are considering opening a hybrids-only repair facility in addition to maintaining their training business. However, the couple sees the Worcester market as being big enough for only one day a week of operation.

“I really wouldn’t hold my breath on hybrid vehicles and the aftermarket just yet,” advises Bob Rodriguez, technical specialist for the National Institute for Automotive Service Excellence (ASE). “I can’t make a business case for training on hybrids right now. The number of vehicles out there is so small and most of them are under warranty.”

Tipping point

The atmosphere is more urgent at I-CAR, the Inter-Industry Conference on Auto Collision Repair. The not-for-profit training provider serves jobbers, collision repair technicians and insurance industry personnel. It is preparing a hybrid program set to hit the classroom later this summer.

“There’s obviously a need for training for technicians,” says Jason Bartanen,

I-CAR’s technical development manager. “It’s more like months rather than years” when qualified hybrid technicians will be needed within the aftermarket. “You are seeing a lot of people moving toward hybrids.”

Hybrid vehicles have been gaining ground in the nation’s fleets, as numerous municipalities and government agencies are opting for hybrids to meet emissions and mileage standards. Bartanen also points to an assortment of new hybrid releases being planned by carmakers, coupled with high gas prices. He anticipates accelerating acceptance of the vehicles.

Berman, the hybrid booster with the hybridcars.com Internet site, foresees a “tipping point” among the motoring masses that will indicate these vehicles are a viable category. “The tipping point may come in a year from now,” he predicts.

In the past, “early adapters” willing to pay a premium for vehicles that protect the environment purchased hybrids, Berman explains. But just within the past few months, economizers are joining the early adapters. “Now we’re seeing people buy in dollars and cents.”

“Every time gas prices get near $2 a gallon we get a considerable increase in interest,” agrees Jim Kliesch, research associate for the American Council for an Energy-Efficient Economy (ACEEE). “In the past we’ve had gasoline spikes, but now that we’re seeing a sustained price increase we can sustain an interest” in hybrids.

“The jury’s still out” on the fate of hybrids, counters Lonnie Miller, R.L. Polk’s director of analytical solutions. “Sales are going to be driven by so many factors. I think it’s still too early.”

American consumers seem to be enamored with traditional high performers, such as sport utility vehicles. “People are still hopeful, thinking that gas prices will come back down,” Miller says.

In 2003, nationwide registrations for hybrid vehicles rose to 43,435, according to Polk’s figures. The Honda Civic hybrid accounted for half of all registrations with a total of 21,750. Toyota’s Prius reached 20,387 registrations, amounting to 47 percent of the market share. Honda Insight accounted for the remaining 3 percent, with 1,298 total registrations.

“People are buying hybrids because of mileage benefits and environmental concerns. With the rising cost of gas in the U.S., hybrid registrations will likely increase in 2004,” says Miller.

“Hybrid technology allows for much improved mileage and lower emissions while maintaining the functionality and convenience of gasoline-powered vehicles. It is a smart technology that is accessible and easy to produce.”

Coming this year are hybrid versions of the Chevy Silverado, GMC Sierra, Dodge Ram Pickup, Ford Escape, Honda Accord, Lexus RX 400 and the Toyota Highlander.

“These new hybrid offerings will expand the market and appeal of hybrid vehicles to a larger consumer base,” according to Miller. “More new hybrid vehicles are being planned beyond 2005, which will continue the growth of this new technology and market.”

Miller points out some demographic details of today’s hybrid customers. “Hybrid buyers have some important differences when compared to buyers of gasoline engine vehicles. They are slightly older on average and their average income is higher,” he says. “We’re also seeing hybrid vehicles drawing more interest from women, on average, than traditional gasoline-powered vehicles.”

According to Polk’s motor vehicle registration database, women account for 38.8 percent of all hybrid registrations. (Women buy 36 percent of gasoline engine vehicles.) The average age of a hybrid vehicle buyer is 49.6 years, compared to an average age of 47.6 years for buyers of gasoline engine vehicles. The average income of hybrid vehicle buyers is $78,350, compared with average income of $71,576 for gasoline engine vehicle purchasers.

In 2003, California and Virginia retained their No. 1 and No. 2 positions with 11,425 and 3,376 hybrid registrations respectively. Florida rose to third place with 1,996 registrations, followed by Washington with 1,972 registrations. Rounding out the top five was Maryland with 1,851 registrations.

Los Angeles was the No. 1 metropolitan market for hybrid registrations, with 4,701. Washington, D.C. and San Francisco/Oakland/San Jose, Calif. took second and third places, with 4,024 and 3,813 respectively. Rounding out the top five markets were New York City and Seattle/Tacoma, Wash., with 1,768 and 1,700 registrations respectively.

Thad Malesh, director of the alternative power technology practice at J.D. Power and Associates, expects to see as many as 20 hybrid vehicle models, including cars, trucks and SUVs, at dealerships and on the road in the next four to five years. With those types of increases in model numbers, and the early hybrid versions coming off warranty, you can expect to see more hybrids hitting the bays.

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