Recently, Toyota announced that it sold its one millionth Prius. Quite an accomplishment for a first of its kind vehicle that was, in many ways, ahead of its time. It was the first and only true gas/electric hybrid when it launched and was able to carve out a niche among environmentally conscious buyers as well as those concerned about fuel economy. The Honda Insight was its first real hybrid rival but was never able to gain a footing among new vehicle prospects. Now, however, there are numerous hybrid rivals to Prius, from the Fusion Hybrid to the plug-in extended range electric Chevy Volt to the all new electric Nissan Leaf. The market for hybrids is getting more crowded, just in time for a return to $4 per gallon gas.
In light of the expanding hybrid market, Compete assessed the recent performance of Prius compared to the new Chevy Volt to determine if the latter is having an impact on the popularity of Toyota’s hybrid that Insight was not able to achieve. Shopping behavior of in-market prospects was analyzed via Compete’s proprietary measure of new vehicle demand derived from observing online shopping activity on 3rd party auto web sites such as kbb.com and edmunds.com. That yields shopper volumes and cross-shop patterns.
The Volt got off to a strong start from its launch in Q4 2010, quickly attracting shoppers and reaching a level, in November, equal to Prius. Since them, Volt demand has fluctuated around approximately 30,000 shoppers per month, trailing Prius but remaining favorable to Honda Insight. For all 3 models, demand increases in 2011 are no doubt the result of rising gas prices which typically drive new vehicle prospects toward more fuel efficient models and hybrids.
With limited availability and limited marketing support, Volt’s early success has likely been driven by all the pre-launch publicity it received. And while demand continues to be strong, the real test is whether Prius prospects are giving it some love and shopping it when they’re in market for a Prius.
Interest in Volt among Prius prospects has steadily improved since Volt’s Q4 2010 launch, peaking in January 2011 when 9% of Prius prospects shopped the Chevy hybrid. In fact, in both January and February 2011, Volt cracked the top 10 models shopped by Prius prospects.
Volt prospects have been shopping Prius more as well: since December 2010 Prius was among the top 5 models shopped by Volt prospects. Volt interest in Prius remains greater than Prius interest in Volt suggesting that Volt prospects could be a risk of becoming Prius purchasers. This is especially true as Volt inventories are severely restricted, which inhibits turning Volt shoppers into Volt buyers. Also, as gas prices continue to rise and hybrid interest grows, Chevrolet could be missing out on a sales opportunity and handing it to Toyota.
However, GM has stated an objective of Volt is to draw dealer traffic that will spill over to other Chevrolet models, particularly Cruze. That’s happening as Volt prospects continue to actively cross-shop Cruze. Nearly 15% shopped Cruze in February 2011 and since December 2010, Cruze has been among the top 5 models shopped by Volt prospects. This interest from Volt has helped push Cruze demand to post launch highs in 2011, trailing only Civic and the new Elantra among small car shoppers and on par with Focus and ahead of Corolla.
While the Chevrolet Volt is carving out its place in the hybrid market, it has stiff competition to contend with. Prius remains the segment leader and sales should remain steady in 2011 or even increase if gas prices continue to rise as expected. Volt could be in a similar position but for its lack of inventory. The bad news for GM is that many of those Prius sales may come from interested Volt shoppers who are looking for a hybrid but didn’t want to wait. The good news is that savvy dealers and smart marketing can turn Volt shoppers into Cruze purchasers, keeping Chevrolet interest concentrated on the Division instead of going outside of the showroom.
As the summer approaches and with it higher gas prices, we will likely see shifts in new vehicle shopping patterns. We saw them a few years ago when gas hit $4 per gallon. Hybrids and small, more fuel efficient vehicles will likely become more popular at the expense of larger vehicles. Key next steps include:
- Understanding how and when fuel prices shift consumer behavior in general,
- Validating which models and brands benefit the most
- Leverage changing interests to capture as many sales as possible
Dennis Bulgarelli is a Client Services Director at Compete. At Compete Dennis is responsible for advising auto clients on trends in consumer online shopping behavior. Before Dennis joined the Compete team he did research and planning at most of the large ad agencies. Dennis hopes to one day, drive cross- country on the blue highways. Follow Dennis on Twitter @dennisbul or connect with him on LinkedIn at http://www.linkedin.com/in/dennisbulgarelli.