Invasion of the Hybrids

The auto giants are putting the spotlight on their eco-offerings at this year's North American International Auto Show in Detroit

by David Kiley and David Welch

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Hybrid vehicles are proliferating, and not just because gas prices spiked to above $3 per gallon last year. Auto makers showing off new hybrid vehicles and plans at this week's North American International Auto Show in Detroit realize that having a hybrid vehicle lineup is valuable public relations for their images.

General Motors (GM), Toyota (TM), Ford (F), Hyundai, Honda (HMC), Subaru, and Nissan (NSANY) are all promoting new hybrid vehicles. The total market for these cars, which run on a combination of electricity and gasoline and generally get better gas mileage than gas-only engines, is expected to reach 780,000 vehicles a year by 2012 as new models are introduced, according to J.D. Power & Associates Automotive Forecasting Services. Even so, hybrids would still only make up 4.2% of the vehicles sold.

Ford will have four hybrids on sale by 2008, including the Escape SUV, Mercury Mariner SUV, Ford Fusion, and Mercury Milan. And at this show, Ford also is showing a concept car, the Reflex, which is powered by a diesel-electric hybrid engine. Ford CEO Bill Ford says the company made a big mistake last year by not heavily advertising the Escape, the industry's first hybrid SUV.

NEW VUE.

"Our people said we would only run a little print advertising, because we would only sell 20,000 and we would sell all we could make, but that was a mistake," says Ford. "Having a hybrid, the first SUV hybrid, is something that carries larger meaning for what the company is stands for and how we want to be perceived." He adds: "We're hiring every hybrid engineer we can find." Ford plans to produce 250,000 hybrids per year by 2010.

GM's long-promised entry into the hybrid market is finally happening. Next year, the Saturn Vue Green Line SUV (the performance Saturns are called Red Line editions) will hit showrooms. It should get almost 30 miles per gallon but with a premium of less than $2,000 over the sticker price of a conventional Vue, says GM Marketing Vice-President Mark LaNeve.

The Vue will be GM's first hybrid, but it will be a so-called "mild hybrid." That means the small SUV won't run in electric-only mode, like the Ford Escape or Toyota (TM) Prius. It mates an electric motor with Saturn's 170-horsepower aluminum V-6 engine for a gas mileage boost of about 15% to 20% above the conventional gas engine.

But beyond that, says LaNeve, GM will sell many more hybrids. In 2008, the Chevrolet Tahoe and Cadillac Escalade full-size SUVS, making their debuts at this week's auto show, will have a hybrid option, LaNeve says. These will be more aggressive hybrids, allowing drivers to accelerate at low speed in electric-only mode, with only the gasoline engine, or both. That gives a 5-mile-per-gallon boost to GM's 19-mgh SUVs. Not much on a real miles-per-gallon basis, but about a 25% gain on a would-be gas guzzler.

LONG-TERM THINKING.

GM won't stop there. LaNeve says by decade's end, GM will offer that same aggressive two-mode hybrid system in "every major segment." That means by 2007, the Chevy Equinox SUV and Malibu will have hybrid versions as well. By offering the option in more segments, and through a hybrid development partnership it has with BMW and DaimlerChrysler (DCX), GM is cutting the cost and can put the technology in more vehicles, says GM Chairman and CEO G. Richard Wagoner Jr. "We introduce technologies all the time that don't make money at the start," Wagoner says. "As hybrids become more mainstream, the cost should come down."

Nissan will introduce an Altima hybrid in the fall of this year as its first foray into a gas-electric production vehicle.