Toyota Motor Corporation (ADR) (NYSE:TM) has a contender in the hybrid segment. Let’s take a look at some essential numbers and check if Ford could effectively compete with Toyota Motor Corporation (ADR) (NYSE:TM).
Numbers changing in favor of Ford
Ford Motor Company (NYSE:F) has already surpassed other automakers, including General Motors Company (NYSE:GM), Honda, Hyundai and Kia Motors, in total hybrid sales, and is slowly becoming the dominant player. Erich Merkle, sales analyst for Ford in the U.S., said that automaker sold 8,481 hybrid cars in April, which brings the total number of hybrids sold in the first four months of the year to 29,561 units. This is quite a number considering the automaker’s record high sales of 35,496 hybrids in 2010.
The fuel efficient redesigned Fusion and the all-new C-Max rolled out in the past year are eating away at Toyota Motor Corporation (ADR) (NYSE:TM)’s hybrid market share. The top markets of the gasoline-electric Fusion — Los Angeles, Washington, D.C., and San Francisco — helped it surpass the sales of Camry, whose sales tumbled 26% in the past month. According to Autodata, 3,989 Fusions were sold in April against 3,257 units of Camry. In addition, Toyota also reported a 21% drop to 19,889 units in Prius sales.
Big leaps
Though hybrids and plug-ins made up just 3% of Ford Motor Company (NYSE:F)’s total sales in April, it is significant for the company. Ford’s hybrids are helping the company expand market share and add new customers in different geographic markets.
The incredible hybrid sales in April helped Ford’s market share increase to 18% for the month, compared to a mere 3% a year ago. On the other hand Toyota, which enjoyed a market share of 71% last year, suffered a decline to 58% market share in the hybrid segment this year.
Ford Motor Company (NYSE:F) overtook General Motors Company (NYSE:GM) in the hybrid market in the past year. General Motors’ sales growth in the electric car segment has been mediocre in comparison to other players. In 2011, the company sold about 7,671 Chevy Volts and 23,461 units in 2012. General Motors now plans to increase the production level to 36,000 units for 2013 and have as many as 500,000 electric cars on the road by 2017.
In fact, Ford Motor Company (NYSE:F) has now teamed up with fellow Detroit players to design nine and 10-speed automatic transmissions. This is aimed at reducing gasoline use and increasing the fuel economy of both companies’ future product portfolios. Other than collaborating with Ford, General Motors is developing an electric car which will have a 200 mile range. The increase in range would come from better battery technology, and by designing a lighter vehicle to improve efficiency.
Challenging the leader
Toyota’s market share may have fallen to 58%, but it is still way ahead of Ford’s. The lead automaker is expected to sell about 250,000 hybrids this year, which is a massive target for Ford. In fact, the US automaker does not even have the facilities to reach such a huge figure.
Challenging Toyota Motor Corporation (ADR) (NYSE:TM) would be tough for Ford considering that the hybrid market grows at a much slower pace compared to the rest of the automobile industry. Per Erich Merkle, the hybrid segment is growing at a feeble rate of 2.5% against a 7% gain for the auto industry. However, the coming year could be a different story, particularly after the unbelievable surge in demand for the C-Max and Fusion hybrids.
The road ahead
Toyota Motor Corporation (ADR) (NYSE:TM) blames falling gas prices as the primary culprit behind declining hybrid sales. The car maker had forecast sales of 250,000 hybrids this year, but chances are high that it will revise its estimate downward. Sensing the increased competition, Chief Executive of Toyota’s North America operations Jim Lentz said that an adjustment in goals might be needed in case demand falls below the sales forecast.
However, Ford Motor Company (NYSE:F) has not yet reported any problem with declining gas prices. What needs to be seen is how Ford’s hybrid vehicles sales are affected if gas prices continue to fall. Will the automaker grumble about the fluctuating gas price? Or will healthy demand for its Fusion and C-Max make it inch closer to Toyota in an effort to win the title of the lead hybrid seller?
The article Will Ford Overtake Toyota in the Hybrid Segment? originally appeared on Fool.com and is written by Rajesh M..
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