Prices turn drivers away from hybrids

Despite the hype from carmakers and the government’s drive to popularize eco-friendly vehicles, South Korean motorists remain lukewarm toward hybrid electric vehicles.

According to industry statistics, less than 8,700 hybrid electric vehicles were sold here in 2010, accounting for less than 0.56 percent of the overall market.

Of the 11 hybrid electric models available in Korea, Hyundai Motor Co.’s Avante LPi Hybrid was the top seller with 4,133 units, followed by Kia Motors Corp.’s Forte LPi Hybrid.

With both vehicles tallying up less-than-impressive figures, the country’s first hybrid electric cars are set to be discontinued within the year.

In contrast to Korea where hybrid electric cars have been met with indifference, such vehicles continue to take up much larger portions of overseas markets.

In 2010, hybrid electric vehicles took up about 2.4 percent of the U.S. market despite sales having fallen 5.8 percent from the previous year. In comparison, car sales in the U.S. increased by 11.1 percent over the same period to 11.59 million units. Hybrid electric car sales came in at roughly 275,000 units.

In Japan, Toyota Motor Corp.’s hybrid electric car Prius sales hit an all-time high of 315,000 units, which is close to 10 percent of the 3.23 million automobiles sold in that country last year.

Hyundai Motor Co.’s Avante LPi Hybrid that will be discontinued this year after less than two years on the market. (Hyundai Motor Co.)

While such vehicles are far superior than conventional cars in terms of fuel economy, those in the industry say that lower fuel costs may not be sufficient to draw motorists to the more expensive hybrid electric cars.

“The relatively high prices were the main factor in dragging hybrid sales. Hybrid buyers aren’t looking for performance but high fuel efficiency, but due to the large price gap with conventional cars, hybrid cars lost much of their merit,” an industry official said.

“Even with the acquisition and registration taxes being exempted for hybrid cars lowering actual prices by 2 million to 3 million won from the marked prices, high fuel economy may be insufficient advantage.”

While the Avante LPi Hybrid far outpaces conventional vehicles in terms of fuel economy, the price tag begins at 21.88 million won ($19,500), higher than the starting price of 18.9 million won for the conventional Avante, and higher even than the midsized sedan Sonata’s 20.02 million won price tag.

The price gap between conventional vehicles and hybrid electric cars also exists in imported brands’ lineups.

The Toyota Camry, which was the country’s third-bestselling imported vehicle last year, is priced at 34.9 million won, while the hybrid electric version of the car comes at a hefty 45.9 million won.

The Prius also comes at a high price for its size.

While the vehicle has a 1.8-liter engine, larger than those usually found in compact cars, but smaller than midsized vehicles, its dimensions are similar to that of the Avante. However, the car is priced at 37.9 million won, which is more than 1 million won more than the price of the second most expensive trim of Hyundai’s Grandeur.

Being in essence the same as conventional vehicles aside from fuel economy, hybrid cars have little more than lower fuel costs to lure motorists.

The current Avante fitted with a 1.6-liter gasoline direct injection engine manages 16.5 kilometers per liter of fuel.

The Avante LPi Hybrid manages 17.8 kilometers per liter.

Applying an annual driving distance of 20,000 kilometers, and the average gasoline price of 1,822.7 won per liter and LPG price of 1,068.28 won per liter recorded during the second week of January, hybrid drivers save about 1 million won over the course of a year.

Using the disparity in fuel costs, a hybrid Avante owner will make up the initial price gap of about 3 million won in three years.

With the Camry managing 12 kilometers per liter and the Camry Hybrid managing 19 .7 kilometers per liter, it would take more than 9 years to make up the price difference of 11 million won using the savings gained from lower fuel consumption.

For the Avante and Forte LPi Hybrids, the use of LPG over gasoline may also have played a part in dragging sales down.

While cheaper than gasoline, LPG-powered engines are less powerful than their gasoline counterparts, and the relative scarcity of refueling stations also puts some motorists off.

However, Hyundai, whose first foray into the hybrid electric market has been less than stellar, is hoping for a better turn of events with the gasoline-electric hybrid version of the midsized Sonata that could hit the local market this coming summer.

“With the Sonata we expect that the price gap won’t play as significant a role, as consumers tend to become less sensitive toward small price differences in larger segments,” a Hyundai official said. He added that the company currently has no plans to develop a hybrid electric version of the new Avante.

The company also appears to be quite confident in the hybrid version of the Sonata’s ability to measure up to more established models such as the Camry Hybrid.

“The figures for Korea aren’t out yet, but by U.S. standards, the Sonata hybrid is slightly more fuel efficient than that Camry hybrid. In the long run, the company is also planning hybrid-only vehicles similar to the Toyota Prius.”

By Choi He-suk  (cheesuk@heraldcorp.com)