Commentary: Hybrids: How Detroit Can Gun the Engines
By Kathleen Kerwin
General Motors Corp.'s (GM ) launch of its EV1 electric car in 1996 stands as a stark reminder of how hard it is to sell consumers on new technology. True, GM mustered a memorable TV ad that showed household appliances celebrating the car's arrival. But it fumbled nearly every other aspect of the marketing, driving the car to a speedy death with a steep price, lease-only deals, and a forbidding application process.
Now, GM and its rivals have another chance, as hybrid cars combining gasoline and electric power finally get ready for prime time. This time the stakes are much higher, since the new hybrids aim far beyond the die-hard environmentalists targeted by the EV1 and first-generation hybrids like the Honda Insight and Toyota Prius. The new wave includes hybrid versions of familiar brands like the Honda Civic compact or Ford Escape small sport-utility vehicle (table). Carmakers hope to expand hybrids to minivans, traditional SUVs, and family sedans. Says Walter McManus, an auto analyst at J.D. Power & Associates: "The experiences people have in the first few years will be critical to whether hybrids reach a mass market."
The EV1 experience showed how easy it is to get it wrong. Here's how to get it right this time:
-- Explain, explain, explain. Auto makers must go way beyond their usual advertising schtick to explain the technology and allay fears about the reliability of new gadgetry. That starts with taking nothing for granted about what consumers know. "The biggest misconception people have is that the vehicle has to be plugged in," says Christine Feuell, Ford Div. SUV marketing boss.
A few carmakers are talking the right talk. Toyota Motor Corp. (TM ) will prepare for its Lexus RX hybrid SUV with an 18-month campaign that carefully lays out its technology. But with the category not yet established, other carmakers are about to create monumental confusion by slapping the tag "hybrid" on vehicles that boost mileage by barely 15%, compared with roughly 50% for true hybrids. That could disappoint buyers and create a bad vibe for the entire category. Warns Mike Wells, Lexus' marketing manager: "Others may rush to market and make compromises that could have a devastating effect on this technology's success."
The industry must mount a solid educational effort so that consumers know just what they're buying. Enlisting independent parties like J.D. Power or the Sierra Club to set hybrid standards would help, too.
-- Aim hybrids at those who can afford them. Hybrids' sticker prices run several thousand dollars above traditional models'. Even with big savings at the gas pump and a federal tax break, it can take a decade to recoup the price premium. And most people will pay only $600 to $800 more for a hybrid, according to J.D. Power surveys.
Auto makers also need to move hybrids beyond entry-level cars more quickly. Honda Motor Co. (HMC ) cites price resistance as a reason that sales of its $20,000 Hybrid Civic still fall a few hundred vehicles short of its goal of 2,000 a month. "The Civic market is the one least able to afford the technology," admits Thomas G. Elliott, executive vice-president of American Honda Motor Co. By offering the hybrid option on upscale models, carmakers could pull in higher-end buyers who feel strongly enough about conservation to pay a little extra.
-- For those who pay more, offer the visual cues that prove they're special. Let's face it: A key appeal of high-end hybrids will be to give well-heeled buyers a clear conscience as they drive their hulking SUVs. So let those buyers broadcast their earth-friendliness. The discreet three-inch hybrid labels carmakers place above the rear bumper are way too easy to miss. By contrast, Lexus may give its hybrid a different grille, wheels, or taillights to set it apart from its internal combustion cousin. That's more like it. After all, where's the cachet in environmental chic if nobody notices?
Kerwin is Detroit bureau chief.