Hybrids gather dust at AutoNation dealerships

Mar 06, 2009 By Matt Andrejczak

AutoNation CEO Mike Jackson has a problem: There are way too many Toyota Prius hybrids sitting on his car lots across America.

They stretch "as far as the eye can see," Jackson remarked at The Wall Street's Journal ECO: nomics conference. He estimated he had some 600,000 hybrid cars "that no one wants."

Fort Lauderdale, Fla.-based AutoNation is the nation's largest car dealer, operating 302 new vehicle franchises in 15 states. In the final three months of 2008, its new vehicle unit sales dropped nearly 40 percent.

"I'm looking for a change in consumer behavior," Jackson said.

One way to motivate consumers to buy more hybrids is a national gasoline tax that would push gas-pump prices to the neighborhood of $4 a gallon, Jackson said. This would help drive down petroleum prices, something that benefits U.S. chemical and airline companies.

This "would keep money in the good ole USA. What's wrong with that?" Jackson remarked.

One problem with changing consumer behavior is perception.

"This whole idea that small cars are unsafe needs to be exploited," said marketing guru Richard Edelman, CEO of PR firm Edelman. He shared the stage with Jackson for the discussion focused on what consumers want and what they'll pay for it.

When home prices were soaring and the home refinancing business was raging and people had jobs and gas prices were low, Americans bought SUVs and big trucks in droves. Then last year, when everything went into reverse, U.S. car makers pulled the plug on SUV assembly lines and started pumping out the hybrids.

But now, gas prices have fallen from $4 to around $2 a gallon, and the economic argument for owning a hybrid is not as strong.

When consumers come to AutoNation looking to buy a hybrid on an economic basis, Jackson said the retailer closes a very small percentage of those deals. He said 5 percent of the retailer's customers buy a hybrid solely based on their environmental philosophy.

Hybrids aren't cheap. The suggested retail price of a Prius starts at $22,000. It is said to get at least 45 miles to the gallon. By comparison, a Toyota Yaris sells for about $14,000. It has a conventional engine and gets 36 miles to the gallon on the highway.

Added Ford CEO Alan Mulally, who was in the audience: "Until the consumer is involved, we're not going to make any progress."

___

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User comments : 15

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patnclaire
3 / 5 (4) Mar 06, 2009
ECON 101. If the supply exceeds demand then lower PRICE. Neet, simple, and effective solution. We are lowering the price of houses, what about over-priced cars? Nothing should be sacred.
Bob_Kob
1 / 5 (4) Mar 06, 2009
Petrol companies really dont want electric and hybrid cars on the market. 10 years ago they lowered the price of fuel just as the first electric cars hit the market and theyve done the same today. All to ruin these companies.
Shootist
1.7 / 5 (6) Mar 06, 2009
"Hybrids aren't cheap. The suggested retail price of a Prius starts at $22,000. "

No thinking person would drive one. The environmental costs associated with the construction and disposal of the batteries alone far outweigh any "carbon" benefit.
Doug_Huffman
3 / 5 (3) Mar 07, 2009
Shootist is on target! Investigate the life cycle of the battery materials.
Damon_Hastings
3.8 / 5 (6) Mar 07, 2009
Shootist: I believe you're referring to the famously polluted Sudbury nickel mine in Ontario, which an unscrupulous news agency blamed on the Prius. In reality, Sudbury has been polluted by over 100 years of nickel mining, and the Prius batteries aren't even a drop in the bucket of *today's* mining. In fact, during the Prius's tenure, Sudbury has actually been *recovering*, environmentally speaking.

Prius batteries are 100% recyclable, and Toyota will pay you $200 to recycle each one (a Prius has several.) Toyota has yet to pay anyone $200, though, because not a single battery has yet gone bad.

This is along the same vein as the discredited CNW report that a Prius uses more energy per year than a Hummer, over its lifetime. CNW arrived at this fallacy by assuming that a Prius has a lifespan of 100K miles, to the Hummer's 300K. My own Prius is now at 250K miles, and it's never had *any* mechanical problems, at all, ever. It's hard to say what the Prius lifespan is, because hardly any of them have died yet. But early indications are that the Prius significantly outlives the Hummer.
david_42
5 / 5 (4) Mar 07, 2009
The biggest problem with the Prius is it doesn't deliver. Its mileage isn't anywhere high enough to justify the premium cost. There are almost 100 vehicles sold in Europe that do better, cheaper. My 1989 Honda Civic did better and had much more room.

Another is the lack of an electric-only mode in the US. Yes, this very useful feature is disabled just for US.

A third is basic to the drive system. The torque limits of the engine and the low power density of the battery severely limit the use of the electric motors.
jonnyboy
1.3 / 5 (3) Mar 07, 2009
This prick wants the government to raise gas taxes to over $2 a gallon just so he can sell all those hybrids that he was stupid enough to buy?

R U F$%#@ing kidding me ?
SDMike2
3.8 / 5 (4) Mar 07, 2009
jonnyboy - Welcome to socialism. It's not only the car dealer that wants to raise gas prices through taxation. There are lots of our "representatives" that want to raise gas taxes. And they're going to use taxes to force you to do other things THEY think are good for you. Seen the SUV tax politicians are working on in MA?
ghinckley68
5 / 5 (1) Mar 08, 2009
Damon_Hastings your are way misinformed on the failure rate of Pirus batteries. I have a client who recycles cars and those battery packs do go bad. Toyota goes to great effort to hide this. At the Toyota dealership he gets parts from there are usually 10 plus that are bad waiting to be picked up.

The other people are correct that the pirus that you are so smug about does for more damage to the environment than my 5.2L gas guzzling Dodge Ram ever thought about doing.

If those battery packs are reclaimed it is probably by some kid in India or china. Who will die a slow painful death from the toxic chemicals in the packs. But more than likely they are sold to some 3rd party who says they where reclaimed but in reality where just tossed in the ground to rot. The dealership my client gets parts from will sell them to any one that will take them. I know this because I was going to buy one for a solar project but found that of the 9 they had most had over 50% bad cells in them.

Just a thought
ghinckley68
3 / 5 (2) Mar 08, 2009
The pirus hammers its battery packs. It has enough brains built in to the packs that it can ignore the failures of individual cells or groups of cells. As i said of the 9 I played with for my project most had greater than a 50% failure rate of individual cells even though the computer in the prius said they where fine. Talking to the mechanics at this dealer ship they implied that the avg pirus will just slowly loose range and never report a battery malfunction. when you show up they just do a swap on the battery pack under warranty. this is why Damon as you say no one has been paid $200 to recycle them.

Don't get me wrong the prius is a good car it is just not environmentally friendly. What is going to become of all these cars in a decade after they have been passed down the line. Most junk yards will not take them because they just are not equipped to deal with the battery packs. Most metal scrappers don't want them cause nickel at 10k a US ton is not worth recycling the packs. So this brings us back to my last post what are we going to do with these packs.

lets look at the specs on them
Open circuit V: 200-270Vdc
cell count : 168 1.2v 3.6aH cells
avg current 200a plus even discharged

I tested one with over 100 dead cells that still produced 163v DC even if it could muster only a few amps of current it would have been lethal to touch its terminals. These where tossed on a pallet no signs no warning stickers no nothing. Just sitting in the rain.

This is a very dangerous thing to play with. The only way to take it apart is very carefully by a human. So again it is unlikely any will ever be recycled. At the energy density in those packs one small slip of the hand and its gone at the least but most likely you are just dead.
ghinckley68
5 / 5 (2) Mar 08, 2009
one last rant
there are only about 4 major nickel producing mines in the world. Two of those are impact craters such as the Sudbury nickel mine.
There is right now about 67million tonns of recoverable ore. At current consumption rates of about 1.7m Tons annually that puts us out of nikel in about 30years.

Now lets way we all go out and buy hybrids with NiMH batteries. lets do a little math shall we

Total cars on the road world wide: 2.5billion 5billion in 20 years.
AVg nickle in pack 50kg or 110lbs

so how many cars could we make before no more nickel.
(167,000,000*2000)/110
3,036,363,636 / 51,971,328 est of annual car production for 2009.
so provided we make only 50 or so million cars a year and we use every ounce of nickel in cars and production rates stay the same we can make about 50 years of them. if world production doubles to account for cars in India and china then maybe 15 20 years. now take out what we use for other purposes and those numbers fall to maybe 12-15 years at current production rates and sub 10 if China and India start buying them.

After that who is going to dispose of them all.

I don't like liquid hydro carbons as fuel but they have the highest energy density of any thing going. And sadly to say what will probably after the real science is done the lowest pollution footprint. Battery powered/fuel cell/hydrogen powered cars or a waste of time. None of them are any better than gas. Most worse.

ghinckley68
5 / 5 (2) Mar 08, 2009
sorry my math in the rant is wrong
"(167,000,000*2000)/110
3,036,363,636 / 51,971,328 est of annual car production for 2009."

Actually
(67,000,000*2000)/110
1,340,000,000 total cars.
so in reality we could only replace half the cars on the planet before we use up all the nickel

My bad!

so at 50 million a year minus everything else maby 10 years worth of cars count in China and India 7-10

This makes NiMH powered hybrids look like a really stupid alternative and is probably the reason you don't see Detroit jumping with joy about making them.
.
Keter
5 / 5 (1) Mar 08, 2009
Another issue is limited lifespan of the batteries, which will die within 5-8 years. That means the second owner will have to replace them or scrap the car, because by then they'll be out of warranty. The cost? Over $8k. You can buy a good used car for that, and it will last at least as long as the new set of batteries.

As for touting the Yaris and 36 MPG, my 1993 Acura Integra routinely gets that on the highway, and 30 MPG in stop-and-go rush hour traffic - with 230,000 miles on it. It's a disgrace that the Yaris isn't getting 50 MPG.
ghinckley68
not rated yet Mar 09, 2009
OH yea forgot about LIon packs. They are a complete non starter as a LIon cell has about 2 -4 years of life from the day its manufactured whether it used or not. And depending on who you talk to Li is even less abundant than Ni.
bmcghie
not rated yet Mar 15, 2009
I'll stick with the Volkswagen TDI engines thanks... wicked fun to drive, and wicked mileage regardless what the EPA ratings say.