Hybrids, Plug-In Electric-Drive Car Sales Plunge On Japan Supply Woes

SANTA MONICA, California — Sales of hybrid and plug-in electric-drive vehicles plummeted to a 16-month low in May, dragged down by real and imagined supply constraints along with increased competition from lower-priced conventionally powered fuel sippers.

Volume of just 17,852 cars and trucks in the advanced technology vehicle segment was down almost 31 percent from April and the lowest monthly tally since February 2010. In contrast, sales of conventionally powered cars and trucks were down 8.3 percent from April.

Despite the addition this year of the Chevrolet Volt plug-in hybrid and Nissan Leaf battery-electric cars and several new conventional hybrid cars and SUVs to the segment this year, May sales of hybrid and electric-drive vehicles were off 35.8 percent from a year earlier, lead by dramatic declines in sales of Toyota and Honda models.

That contrasts sharply with a decline of just 3.8 percent from a year earlier in May sales of conventional vehicles. The steep slump came despite slight increases in sales of conventional hybrids by Ford Motor Co., Nissan Motor, Porsche and BMW as segment leader Toyota Motor Corp. saw sales of its Toyota and Lexus hybrids drop 45.1 percent for the month while Honda Motor's hybrid sales fell 29 percent. The two Japanese automakers typically account for close to 70 percent of the U.S. hybrid market, so a big drop in sales of even a few of their leading gas-electric models has a tremendous impact.

In May, both were hit by real inventory shortfalls as they struggled to bring operations up to full speed in the aftermath of the power, production and transportation disruption caused by March's huge earthquake, tsunami and related nuclear reactor shutdowns in Japan. News of production slowdowns at the two companies also had the effect of persuading many shoppers seeking fuel-efficient cars to look at other brands without even checking on inventories at Toyota and Honda dealerships, said Edmunds.com analyst Ivan Drury.

Increased demand during the month for fuel-efficient vehicles was unmet by hybrids due to actual and perceived hybrid inventory shortfalls and that, in turn, led buyers "to look at and find alternatives among conventional vehicles," said Edmunds.com Chief Economist Lacey Plache. This was particularly true in the case the Toyota Prius, the industry-leading hybrid. Prius sales usually account for more than half of all hybrid and electric-drive vehicle sales each month but fell to just 38.8 percent of the segment's sales in May.

Inside Line says: For a deeper analysis of advance-tech car sales, click through to Edmunds' AutoObserver. — John O'Dell, Senior Editor