Navigant Research Blog

SUVs: The Next Hybrid Market Segment

Scott Shepard — December 10, 2013

Plagued by declining market share, Suzuki exited the U.S. market in 2012 to focus on the growing vehicle market in India.  A number of other domestic and international legacy vehicle brands including Saturn, Saab, Pontiac, Isuzu, Mercury, Oldsmobile, and Hummer have vanished from dealer lots.  The exodus is due to the recession as well as an evolving U.S. light duty vehicle (LDV) market that is increasingly competitive as annual new vehicle sales have failed to return to pre-recession levels of 16 million to 17 million.  Early in 2013, industry analysts predicted that the next makers to back out of the U.S. market would likely be Mitsubishi and Volvo, as both have market shares hovering around a 0.5%.  Despite no significant sales improvements by either automaker since 2012, though, both appear to be committed to the United States through next year and are planning to launch new plug-in hybrid (PHEV) SUVs in late 2014 or 2015.

Mitsubishi was one of the first automakers to deploy a plug-in electric vehicle (PEV) to the United States with the 2012 launch of the i-MiEV.  U.S. market acceptance of the small PEV has been tepid with around 70 i-MiEVs sold monthly.  Though Mitsubishi will continue to produce the i-MiEV, much of the company’s survival strategy centers on its crossover, the Outlander.

Mitsubishi’s 2013 LA Auto Show exhibit was thick with variations of the Outlander.  Noticeably absent, however, was the company’s PHEV version of the vehicle.  The Outlander PHEV was first introduced to the Japanese market at the beginning of 2013 and was the market leader among PEVs until problems with the vehicle’s battery pack put a hold on vehicle sales.  Despite the battery issues, as of last month the vehicle has made first sales in the robust European PHEV markets of the Netherlands and Sweden.  An introduction to the United States is expected in 2015.

O Pioneers

The United States remains Volvo’s largest market, despite the company’s focus on the growing Chinese market.  The luxury automaker introduced the V-60 diesel PHEV to European markets in 2012 and sold out before the vehicle went on sale.  Volvo has since scaled up production from 1,000 in 2012 to over 7,000 in 2013, and is targeting 10,000 in 2014.  This first diesel PHEV will not make its way to U.S. shores, as the V-60 is anticipated to end production after 2014.  The vehicle’s drivetrain will be placed on the gasoline-powered XC90 SUV, which will be sold globally.

In Navigant Research’s upcoming Electric Vehicle Market Forecast report, the United States is estimated to account for around 19% of the global LDV market, second only to China.  Though the U.S. market has declined, it’s still a fundamental market for many of the surviving legacy brands.  Sales of PHEVs grew over 80% from 2011 to 2012, while the total LDV market grew 13%.  Year to date PHEV sales are up 28%, while Navigant Research estimates the total vehicle market will grow 9% over 2012.  Automakers have yet to introduce a mass-market PHEV in the crossover, SUV, and truck segments, which account for nearly 50% of the U.S. market.  The yet untapped market will serve its pioneers well.

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