Buyers Are Ignoring 'Green' Vehicles Due to Falling Gas Prices

Oct 20, 2014 04:30 PM EDT | Tim Healey

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Showing that consumers may have short memories, falling prices at the pump are already cutting into hybrid and plug-in sales, and Americans are starting to buy more trucks and SUVs, according to a report in Automotive News.

One Toyota dealership general manager told Automotive News that since the price of fuel fell, customers have been more interested in the trucks and SUVs in the showroom than in the brand's iconic Prius hybrid.

Gas prices are the lowest they've been since February 2011, and analysts are forecasting that the drop is more than just the usual autumn fall, instead indicative of a larger trend of lower prices--and more price stability--thanks to better American oil production, lower global demand for oil and cars and trucks that are more fuel-efficient than ever.

Not long ago, hybrid options stickered for more than comparable traditional gasoline-powered vehicles, but now dealers and manufacturers are using incentives to move the metal. According to Automotive News, Kelley Blue Book data shows that Toyota increased incentives on the Prius by almost $1,000 since last year, and Ford did the same by more than $2,200 on the C-Max hybrid.

Alternative-fuel vehicles often cost more up front than gasoline vehicles, with the hope being that consumers can make the money back over time in fuel savings. But it takes a long time to do that, and with gas prices dropping, consumers might not be willing to wait.

Automakers also need to sell hybrids in order to keep in compliance with tightening Corporate Average Fuel Economy regulations, but if consumers shift back to non-hybrid cars and trucks, automakers might be in a bind trying to sell vehicles that consumers don't want.

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