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The race is on for hybrid leader; Japanese ahead
AFP, BusinessWorld (12 Jan 2005)

DETROIT, Michigan: American automakers are accelerating their efforts in hybrid technology, with one notable success, but the Japanese lead over Detroit was in clear evidence as the North American International Auto Show got under way Sunday.

The market remains in its infancy, with Japan's Toyota and Honda the early leaders. But Ford Motor Co. scored a coup at the auto show opening with the hybrid version of its Escape sport utility vehicle (SUV) named North American Truck of the Year by a panel of auto writers.

General Motors presented only a prototype of its hybrid SUV called Graphyte but has several models in the pipelines, and is working with DaimlerChrysler on new engine technology for hybrids, which run on either its gasoline engine or on its electric motor depending on driving conditions.

Thad Malesh of the Automotive Technology Research Group said he expects up to 50 hybrid models on the US market by 2010. And the research firm JD Power and Associates sees hybrid sales of over 500,000 vehicles by 2010, or nearly 3% of the overall US market.

"It could certainly take a very large minority position 10% to 20%, maybe a bit more," Mr. Malesh said, adding that the recent spike in fuel prices "has already caused people to think about alternatives to current engines. They still want to buy a large SUV, but what they're looking for is a way of to get somewhat better fuel efficiency."

Toyota sold some 54,000 of its popular Prius hybrids last year, double the number of 2003. That remains a drop in the bucket among the 17 million autos sold in the US last year, but demand is outstripping supply, helped by movie stars like Cameron Diaz and Leonardo DiCaprio, who are members of the Prius club.

Still, hybrids may be held back by their higher cost and a perception that the engines lack power.

"The hybrids are coming. Whether this will constitute a trickle or a tidal wave is still to be determined," said Lindsay Brooke of the research firm CSM Worldwide. "What is certain, however, is that every major automaker is preparing hybrid-electric technology for possible deployment in the next few years."

And it remains to be seen whether US firms can catch up to their Japanese rivals.

"From a technological standpoint, [US automakers] probably can" match the Japanese, said Malesh, who adds that other factors are in play.

"Will they compete effectively? Will they have as many vehicle or as much share? Probably not for quite a while. The biggest hurdle is they're so late to market. The average buyer is going look at it in a very common sense way and say, 'well Toyota has been out there for almost 10 years and Ford and the rest are just getting in the market.' For some people it won't matter but a lot of people will care, and they're just not going to get those people to come to a Ford or a Chrysler or a GM until they get five or six years of experience."

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