Obama bolsters hybrid auto sales in waning market

President Obama's administration has bought almost a fourth of the Ford Motor Co. and General Motors Co. hybrid vehicles sold since he took office, accelerating federal purchases as consumer demand wanes.

The General Services Administration, which runs the government fleet, bought at least 14,584 GM and Ford hybrids since Obama became president in 2009, according to sales data obtained by Bloomberg under a Freedom of Information Act request. And all told, the companies sold 63,434 of those vehicles during that period, according to data compiled by Autodata Corp.

"At some point, the reality is that for this technology to be accepted, it needs to be done without a government crutch," said Jeff Schuster, director of forecasting at J.D. Power & Associates in Troy, Mich. "But without a huge gas-price increase or further government demand, the natural demand just isn't to be there."

The 14,584 GM and Ford hybrids made up 10 percent of the government's total vehicle purchases over the past two fiscal years, up from less than 1 percent in fiscal 2008, the data show. The government is boosting investment in a technology that has failed to win broad acceptance after more than a decade in the marketplace. Consumer sales of hybrids are headed for their third consecutive yearly decline. Government agencies and businesses have said they also will purchase all-electric models being introduced by automakers including GM.

About 3,100 of the hybrids purchased by GSA were paid for out of $300 million that the agency received from the 2009 economic stimulus package, agency spokeswoman Sara Merriam said in an interview. Another 5,600 were bought with proceeds from selling older cars in the government fleet, she said. A majority of fiscal 2009 hybrid sales came after Obama took office in January 2009.

"This is the beginning," 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."

The models purchased by the government ranged from $23,072 to $47,079, according to the data.

The government paid an average of $5,281 less for its hybrid vehicles than sticker prices at a dealership, according to a comparison of the GSA purchase data with prices collected by Edmunds.com, a consumer information website.

Global sales of hybrids, plug-in hybrids and electric cars are projected to be 954,500 vehicles, or 2.2 percent of the 44.7 million passenger vehicles projected to be sold this year, J.D. Power said in an Oct. 27 report. That may rise to 5.2 million units in 2020, according to the report.

"The lesson learned is that it isn't easy to make these vehicles mainstream," said Brett Smith, who specializes in alternative propulsion vehicles at the Center for Automotive Research in Ann Arbor, Michigan. "They are still not near the point where they are cost-competitive in the market."

Toyota Motor Corp. sold the first hybrid Prius in Japan in 1997 and Honda Motor Co. introduced the first hybrid to the United States in 1999. Total U.S. hybrid sales since then have been about 1.8 million, or about 1 percent of the 175 million cars and trucks sold during that period. More than half of those hybrids were Prius models.

This article appeared on page D - 6 of the San Francisco Chronicle