Chrysler LLC may sell only a few thousand of its hybrid sport-utility vehicles a year, as the third-largest U.S. automaker brings out its initial gasoline- electric models in August, analysts said.Even with what Chrysler says will be a 25 percent gain in fuel economy over gasoline-only versions of the SUVs, consumers may not be willing to pay the $3,600 premium the automaker is asking for the hybrid 2009 Dodge Durango and Chrysler Aspen, said Joe Barker, head of North American forecasting at CSM Worldwide Inc., a Northville, Michigan-based auto consulting firm.
“Because the value proposition weakens when hybrid premiums exceed a couple thousand dollars, consumers may have difficulty justifying the incremental cost,” Barker said in an interview.
Chrysler is playing catch-up to competitors such as Toyota Motor Corp., which has offered gasoline-electric vehicles for more than a decade and has the best-selling model with the Prius sedan. Demand for hybrids has increased as average U.S. gasoline prices have jumped to more than $4 a gallon. Consumers also are shifting to cars from pickup trucks, SUVs and vans.
Barker forecasts total annual sales of 1,000 for the Auburn Hills, Michigan-based company’s Durango and Aspen hybrids.
Chrysler said the gasoline-electric mid-size SUVs will be aided by a $1,800 income-tax credit under a U.S. program to spur sales of fuel-efficient vehicles.
With the tax credit, 12,000 miles of driving a year and gasoline at $4 a gallon, the hybrid SUVs would cover the premium to gasoline-only models in about two years, said Michael Berube, a senior marketing manager for the closely held automaker, in an interview. He declined to give a sales forecast.
Chrysler said in a statement today that prices start at $45,340 for the Durango hybrid and $45,570 for the Aspen.
Price Strategy
Chrysler is trying to lure buyers to the hybrid SUVs with prices lower than those for General Motors Corp.’s Chevrolet Tahoe and GMC Yukon, which use the same gasoline-electric system. GM sells two-wheel-drive versions of those larger SUVs for about $5,000 more than Chrysler’s four-wheel-drive hybrids.
“We think it’s a pretty compelling story,” Berube said. “We think it’s not going to be that hard of a sell.”
GM began selling its hybrid SUVs in February and sold 1,735 through May, according to company figures provided during calls with reporters. The base model of the GM hybrids costs almost $13,000 more than the similarly equipped gasoline version.
Total U.S. sales of mid-size SUVs such as the Aspen and Durango fell 29 percent this year through May, according to Autodata Corp. in Woodcliff Lake, New Jersey. Industrywide auto sales declined 8.4 percent and Chrysler’s slid 19 percent, while those of hybrid cars and light trucks rose 5.8 percent.
Mileage Boost
Chrysler said its hybrid SUVs average a combined 20 miles per gallon in city and highway driving, a 25 percent increase from the gasoline-only models. GM’s Tahoe and Yukon hybrids have a similar improvement in fuel economy.
The Chrysler and GM models use a gasoline-electric system that the two companies developed with Daimler AG and Bayerische Motoren Werke AG. Hybrid systems combine electric motors and an internal-combustion engine to reduce fuel use.
“The problem is that the hybrid is being used in such large vehicles with big V-8 engines and that are very heavy. So even though the technology is great, you are not seeing a great improvement in gas mileage,” said Mike Omotoso, an analyst at market-research firm J.D. Power & Associates in Troy, Michigan.
Omotoso said J.D. Power expects Chrysler to sell 2,500 of the vehicles this year and 4,000 in 2009.
