With its first mass-market hybrid, GM emphasized cost savings. That may be just what the market needs.
By Peter Valdes-Dapena, CNNMoney.com staff writer.
NEW YORK (CNNMoney.com) - In creating its first gas-saving hybrid vehicle for the mass market, General Motors took the cheap way out. This time, it could prove to be a very smart move.
The fact is, hybrids just aren't selling like they used to. While the Toyota Prius is still a hot item, Ford is offering incentives on its hybrid SUVs, and sales for other hybrid vehicles are softening.
One reason is that most hybrids, unlike the Prius, are not distinctive. A Toyota Highlander Hybrid looks like a Toyota Highlander. A Ford Escape Hybrid is a Ford Escape. "So the hybrid becomes another powertrain option," said Anthony Pratt, an analyst with J.D. Power and Associates.
That means that consumers are increasingly putting hybrid systems through the same cost/benefit analysis to which they would subject any other high-cost option.
For consumers simply looking to save money in the face of rising gasoline prices, it makes more sense to purchase a fuel-efficient vehicle that doesn't rely on hybrid technology. Hybrid versions of vehicles usually cost about $3,500 to nearly $8,000 more than non-hybrid versions. Part of that cost is for unrelated options that usually come as part of a hybrid package that you might not even want - third row seats, leather interior, wood grain veneer.
Another answer might be to buy a vehicle with a less complex, less expensive hybrid system. It might not be quite as fuel-efficient but it will pay for itself faster.
The Saturn Vue Green Line hybrid SUV, coming out this summer, will cost about $2,000 more than a regular Saturn Vue. Its sticker price will be about $23,000, making it the cheapest hybrid SUV you can buy.
"A total price in the low $20,000 range, I think, opens the door to the mass market," said Jesse Toprak, executive director of industry analysis for Edmunds.com.
The Vue Green Line uses a system that relies on lower voltage than other hybrids. That means, for one thing, that the Vue Green Line doesn't need nearly as large of a battery pack. Batteries cost money and add weight. It also made the Vue's hybrid system easier to integrate into a normal automotive electrical system which, again, means lower cost.
But the Vue Green Line's electric motor can't actually drive the vehicle on its own even at low speeds, the way, for example, a Ford Escape Hybrid's can. In all hybrid vehicles, the gasoline engine automatically shuts off as soon as the vehicle stops moving even at stop signs and red lights. That saves all the gas wasted in pointless idling.
But, once the vehicle gets going again, the Ford Escape Hybrid can crawl through city traffic without starting its gasoline engine at all, at least until the battery needs recharging. In the Vue Green Line, however, the gasoline engine starts running the moment the driver's foot lifts off the brake pedal. The electric motor in the Vue assists the gasoline engine in propelling the vehicle but it is too weak to do much on its own.
Instead of having a high-efficiency continuously variable transmission, as other hybrid vehicles do, the Vue Greenline has the same four-speed transmission as the regular Vue. Again, the slight gain in efficiency that would have come from a CVT wasn't worth the added cost.
Some hard-core hybrid fans may look askance at the Vue's low-cost hybrid compromise. It does save gas, but not huge amounts. GM claims the Vue Green Line will get 20 percent better fuel economy than the a regular 4-cylinder Saturn Vue SUV.
Since the Vue is already a relatively efficient SUV, 20 percent means five miles per gallon. Overall, its estimated mileage is a little less than a Ford Escape Hybrid or Toyota Highlander Hybrid, but the Vue Green Line will also cost thousands less than those SUVs.
The Vue Green Line's hybrid system may be the right way for GM to crank up its hybrid vehicle portfolio but it will still face serious hurdles with buyers. For one thing, it's a Saturn Vue. The Vue has not been treated nicely by Consumer Reports, an influential source for car shoppers, which gives it "Much lower than average" marks for predicted reliability and has little good to say about it otherwise. (Despite the criticism, the regular Vue has been selling about as well as the average mid-sized SUV, though, according to Edmunds.com.)
Also, Toprak of Edmunds.com points out, the Vue Green Line will be available in two-wheel-drive only, eliminating a big reason many buyers opt for an SUV to begin with.
In creating a cheaper way to make small hybrid vehicles, GM has taken an important step toward making the technology truly mainstream. Now the trick will be to build a really compelling vehicle around this new powertrain. As gas prices rise, a cheap, efficient vehicle that's genuinely good is something that car buyers will really have an appetite for.