Obama Administration Bolsters Hybrid Auto Sales as Consumer Demand Declines

According to a new report by Bloomberg, nearly one quarter of all Ford and General Motors hybrids sold since President Barack Obama took office have been purchased by his administration in an attempt to offset waning consumer demand.

Bloomberg reports that, over the last two years, at least 14,584 hybrid autos were purchased by the U.S. General Services Administration for use in government fleets. Those purchases accounted for about 10 percent of the 145,473 vehicles purchased by the agency during the two-year period.  In fiscal year 2008, hybrids accounted for less than one percent of the vehicles purchased by the agency.

The GSA has limited its hybrid purchases almost exclusively to domestic models. It has purchased approximately 64 percent of all Chevy Malibu hybrids before GM stopped production due to low consumer demand. It also purchased about 29 percent of all Ford Fusion hybrids and 14 percent of all Ford Escape hybrids built since President Obama took office in January of 2009.

In the past two years, the GSA has only bought 22 hybrids from foreign automakers – five Honda Civic hybrids and 17 Toyota Prius hybrids.

Chrysler Group LLC began making hybrid vehicles in 2008 but stopped production just two months later.

In addition to hybrid vehicles, the federal government has said that it intends to purchase all-electric vehicles, and many large corporations have also added increasing numbers of hybrid and battery-electric vehicles to their corporate fleets.

Hybrid vehicle sales to U.S. consumers, on the other hand, are expected to decline for the third consecutive year.

According to an October report by J.D. Power & Associates, world-wide sales of hybrids, including plug-in hybrids, and all-electric vehicles, are only expected to account for 954,500, or 2.2 percent of 44.7 million passenger vehicles sold in 2010. By 2020, Power projects the number to increase to 5.5 percent.

J.D. Power & Associates Director of Forecasting Jeff Schuster says, “At some point, the reality is that for this technology to be accepted, it needs to be done without a government crutch, but without a huge gas-price increase or further government demand, the natural demand just isn’t to be there.”

GSA spokeswoman Sara Merriam said that approximately 3,100 of the hybrids purchased by the agency were paid for with funding it received from the 2009 stimulus package. She said an additional 5,600 hybrids were purchased with proceeds from the agency’s sale of older government fleet vehicles.

Merriam said, “Our main goal is to increase the fuel efficiency of the federal fleet. The other goal is to drive the market toward cleaner technologies. It’s in the early stages of the government acquiring more hybrids and in larger quantities.”

According to the government data, obtained by Bloomberg through a Freedom of Information Act request, the hybrid vehicles purchased by the GSA ranged in price from $23,072 to $47,079. Compared with consumer data compiled by Edminds.com, the agency paid an average of $5,281 less per vehicle than dealership sticker prices.

Safe Climate Campaign director Dan Becker says, “It’s good that the government leads by example. At a time when we’re just beginning the era of the hybrid, it’s a positive sign that the government is stepping up to the plate and helping build that market.”

In a November 8 speech to Detroit-area suppliers, however, Ford Motor Company CEO Alan Mulally spoke about the dangers of relying on government subsidies. Ford spokeswoman Karen Hampton said that Mulally told the group, “Incentives have a role to play when you’re trying to get new technology off the ground or change behaviors, but it’s not meant to be a permanent part of the business equation.”

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