Lutz: Only About 5% of the Population is Willing To Pay Up for Green Cars

Honda Insights are flying off the lot.
Green, and the price is right.

firstwagon - you said "The real queation is how much are they willing to pay? Very few will pay double which will be a problem with cars like the Volt or the Mitsubishi i-MiEV." I went to get an oil change for my Passat yesterday and while I was waiting, I test drove a diesel Jetta, nice car, good power, good torque, good size, and good price. I also wonder how many people will pay a premium for a Volt.

"Honda Insights are flying off the lot."

Honda sold 2800 Insights last month. And that's the "cheap" hybrid. Compare that to over 30,000 F-150's...

People vote with their wallets.

Diesels and the Volt are two sides of the "green" coin. The Volt is for those few, loud extremists who would otherwise buy a hybrid, who don't care about cost-benefit, environmental impact of manufacturer, or anything other than the image. Diesels are for the guys who will do the math, do the research, and don't want to be conspicuous about it. Both markets are good to reach out to, so it is troubling that GM is ditching its diesel plans.

Yes, trust Lutz. I once saw him consume a baby white rhino using chopsticks and a tube of wasabi. Afterward he picked his teeth with its pubescent tusk and mused, "Gotta say the Siberian Tiger with Miller Lite tasted better."

"Honda sold 2800 Insights last month"

....and I'll bet that was every Insight Honda could produce (it's a new product still ramping up) whereas I keep seeing see aerial shots of vast parking lots of unsold stored pick up trucks.

Times are changing.

I have to dis agree with first wagon. To me, paying a premium means paying more than i would ever make back in fuel savings. If the long term cost to own of a more fuel efficient vehicle is higher than a comparable competitor with worse fuel economy, i would get the one with poor fuel economy. That is where the premium is.

dlibby

So the only benefit you can see to burning less oil is saving money?

Take a family making under $100K combined and ask them if they'll pay $4000+ more for a "green" car. On one hand, they'll reduce the US consumption of oil by a few hundred gallons, and maybe help reduce the planet temp by 0.00000000000001 degrees by 2050. On the other hand, they can use that money for the kids college fund, their retirement fund, or just use it to pay the mortgage.

Good for the people that choose the first option I guess, but my sympathies are with those who choose the second.

I don't think saving money is the only factor, but it is a big one. Personally comfort rates above fuel economy as well. If I have to make a choice of keeping myself out of debt and eating well over not burning 60-100 gallons of gas a year i would always choose the cheap one.

Cars are not the worst polluters out there, especially in the US and other developed countries. I do not feel bad getting 33mpg with my 4 cylinder gas burner instead of 39 in an 2009 Prius (Edmunds 2 week average, in Jetta TDI comparison) and i paid $9k less. I don't buy in to the whole hybrid hype. What about the pollution associated with battery manufacturing and disposal?

In a previous post on here a study was pointed to that indicated the worlds 15 largest ships produce as much sulfur oxide pollution as all the worlds cars. I see that as a great oppurtunity for improvement, as well as all other industrial pollution. But I'll take my comfortable and cheap gas burner any day.

mirth

You're right, they may not pay $4K more for a green car because they can't afford it.

Strange how many will find the money to buy an Accord instead of Civic though... or to get the leather and Nav system option.... or high end stereo and DVD player etc.

Also... sure one person cutting back doesn't make a big difference but what if everyone reduced their fuel consumption by 30%? Surely you'll agree that would make a difference.

BTW.. even if you don't agree with global warming (which I don't), you can't argue pollution is real. Just look up on a hot day like this.

Just a thought.

I won't sacrifice fun. The closest thing we have to fun and efficient in the US is the 335d. Gimme a 320d or 330d and I'll gladly give up my 3 series for a diesel. A hybrid? Not gonna happen. Batteries are heavy. Heavy is the enemy of fun. The only fun hybrid available right now is the Tesla and I haven't driven one so I can't comment on it. With only two seats it's not practical for my life. When I do buy a two seater for a weekend car it'll be a used Porsche or a used Miata.

bgdc, the Tesla is a hybrid? News to me. I don't think you can make fun of Lutz anymore after that one...

"I won't sacrifice fun"

I agree completely there. I don't agree the only fun car is the 335d though.

My quick list of fun and efficent cars..

Mini
Miata
Fit
Civic
Mazda3

(Only included cars that I have driven and know to be fun, feel free to add your own favourite)

There are likely dozens more that aren't imported here (but hopefully will show up as Saturns or Chrysler/ Fiats).

I don't how Lutz came up with the 5% number. Everyone I know WANTS a hybrid, but with the price premium, it simply doesn't make sense. I agree with dlibby that it's more worth it to save money buying a car that's slightly less efficient than a hybrid. 2-6 thousand saved on price of a car will pay for fuel for the next 2-3 years on an economical car, or you can use that money for anything else for that matter. I'd very much rather have chicken breast and rice for dinner than a can of beans!

Environmentally sound for a premium price. What a niche market. Way to be narrow Lutz. Look at the more important bigger picture: expand the GM line of smaller (diesel or gas) cars that get 30-50mpg?

There's no free lunch. There is a huge trade off right now in cost, complexity, weight, and overall driving character with these hybrid things. People do vote with their currency and are in the best position to do so. They may say they want a hybrid due to all the hype they've been subjected to, as well as wanting to sound good to whomever they're speaking, like oh, they really care so much and don't want to be lampooned for wanting something that's supposedly going to kill us all and destroy the planet. The propagandists have conditioned many to want to respond that way, lest they be criticized for not going along like a drone with the supposedly popular sentiment.

But when it comes time to buy, many of these people chose a different option once they find out the reality. And it is not up to anyone else who thinks they know better to force them into a different choice.

Just because everyone one encounters supposedly wants a hybrid doesn't mean that all the other people they don't know also wants one. That is anecdotal evidence which doesn't translate into a statistically valid sample.

Stov,

I'll mock the man until he dies - which given his diet of living off the toil of human sweat probably allows him live a Dorian Gray-like existence.

:P

There's no edit feature on these blogs, baby, so mistakes happen. Bob Lutz's entire tenure at GM qualifies as something a bit beyond a proofreading accident.

First - miata isn't a car i can use as a daily driver. That's why I mentioned it as a weekend car.

Mini - owned one. fun enough. not something I can use daily and really not nearly as much fun as a RWD car.

My quick list of fun and efficent cars..

Fit, Civic, Mazda3 = FWD and while good mileage not on the level of fun, efficiency or relaxed freeway cruising/corner carving as a 330d.

As for the people who want hybrids - judging by So Cal the Prius is a GIANT hit with the over 50 crowd. The boomers seem to love that boring car.

How can anybody trust this scumbag Lutz? He's made MILLIONS OF DOLLARS working for GM, then when the going gets a little tough he and the rest of those upper echelon ilk sell out all their stock for a measly few hundred thousand dollars thereby driving the stock further into the toilet. Lutz is 100% no-class traitor!

Here's a thought. How about we let people buy the car they really want to own rather than being browbeaten by eco-warriors like firstwagon into buying crap we don't? Sure the Miata and Civic are fun, but so are the Camaro and the 370Z. Last I checked, most new cars today are at least LEV vehicles so I don't by your pollution argument. And it may be difficult for some of your little environmentalist brains to comprehend this but alot of people actually need big vehicles for their work or for their large families, or frankly just because they feel safer in them. Who are you to tell them they have to trade in for some hybrid tin can???

"Who are you to tell them they have to trade in for some hybrid tin can???"

I don't think anyone in this forum has told anyone to do so. As far as buying a hybrid, leave it to the buyer. It's their money so let them use it as they please.

"Just because everyone one encounters supposedly wants a hybrid doesn't mean that all the other people they don't know also wants one."

That's true. Not everyone wants one, but I'm sure many people have bought into it by now. Though in the end, it all boils down to money. I don't think many people are willing to pay a premium for a hybrid. In my opinion, I would buy one only if the price was justified beyond "going green".

majin,

Where do you get that people can't buy large, inefficient cars?

Nobody has told you that you can't buy a large vehicle.

This will never be the case. In the 1970s and 1980s large vehicles were still available. The market will never dry up for large vehicles. And nobody is banning them.

I'd say that the record shows very much that Lutz is correct in his assessment. The "success" of the Prius, usually held up as proof that people will "go green", depends more on the cache and status statement that it makes rather than its green credentials.

The smaller things like partial zero emissions (no evaporation) fuel systems and motor shut down at traffic lights can be built in across the board but most customers are not willing to pay the money or accept the real world limitations of true gas/electric hybrids, let alone plug ins or CNG alternatives.

5% of people would like to pay for green cars, and a truck-making company like GM is going bankrupt? How histerical? Everyone always thinks of prius, insight or recently volt for green cars, but the fact is that there are many other green-car options which people do not have to pay a premium for. Corollas, Civics, other small and diesel cars that have very good mpg are environmental-friendly as well. GM is just playing defending games for its past mistake. Lutz should be talking more about improving quality and real gas mileage of GM small cars instead of playing the this-is-why-we-made-trucks talk. Guess stupid people do not learn from their mistakes.

Only idiotic red-necks buy trucks. Why should anyone else but farmers, construction workers need a truck?

Any body who thinks people want hybrids/evs to save the environment is full of bs and kidding themselves. Anybody remember the hybrid craze when gas prices were $4+? Then they come back down to under $2 and SUV sales go up again. The only ones that will be buying the Volt are the Hollywood types who can afford to look green. Of course, they still have their gas guzzling exotics and SUVs to take out when they get bored of putting around their Volt.

Hmmmm... Coming from a guy who predicted that small cars do not have a future in North America. We'll have to see how wrong he is in 5 years time.

All I have to say is take off all the Hybrid badges and lets see how many sell.

"browbeaten by eco-warriors like firstwagon into buying crap we don't?"

I'm an eco-warrior???

Let's see now...
-I don't believe in global warming.
-I think electric cars will be important someday but right now they only exist for PR reasons
-I doubt fuel cells will ever be in cars
-I think the Volt is a bad engineering idea that is only being continued to make the government happy
- I think hybrids only make sense for the small amount of people who do huge amounts of city driving
- I love diesels

If I were I think they would kick me out of the club.

My only points on this post were that most people are willing to pay a premium for a "green" car but not a big one and that there are fun cars that are efficent.

I guess suggesting that it's OK to try to use a little less gas or be a bit "greener" is too much for some people to accept.

Mr Lutz,
Do you have a job? I didn't think so.

Lutz is basically correct, as long as gas is $2 a gallon (or $2.50).

But start working on these vehicles now, and 4 years from now when gas costs $6/gallon, they'll sell.

Lutz is $3 a gallon in CA and going up. Oil (thankfully) is over $70 a barrel and also going up.

first wagon:

The 3 and Miata are not efficient cars. They are efficient compared to a 335i or Corvette, but they are not efficient cars for their size and power. Also, your assertions that the Insight is limited by production are hard to believe. Honda was planning to sell 100k a year in the US. I don't think they are impressed by sales so far. They will be lucky to sell 50k.

Lutz is correct all around much to the chagrin of GM haters like BDC. The truth always hurts. Hybrids were 2.5% of the market last year and gas was between $3.50 and $4 for much of the last year.

"Mr Lutz,
Do you have a job? I didn't think so. "

He is 77 and rich. Why the hell would he need a job?

I didn't argue with his statement. :) I mocked him for being the embodiment of "The Man."

I wont buy a green car they arent worth the price you pay for them...most people i know wont buy one...i would take a diesel anytime over a hybrid

Hybrids weer 2.5% of the market. Considering only a couple manufacturers even offer them that's a pretty significant number.

I think Lutz has his numbers all wrong. He leaves a great legacy over many years but he is misreading this Volt completely. Despite what folks say you won't have rich weenies buying this car because it's a crowd that generally buys imports. The Volt doesn't show me anything that says it's leaping beyond a Prius. More of your tax dollars down the drain.

Yes, the Mazda 3 and Miata don't really qualify as economical - just small.

I used to have a lot of respect for Mr. Lutz, but I now have almost no respect for him. He did reasonably good for himself, and he has a good eye for design, but he cannot run a company.

I would pay a premium for a green and fun vehicle. Count me in. Green + Fun = any turbo engine (preferably a turbo diesel)!

2fast:

The fact that you are one person who will pay for a green car doesn't prove anything. Lutz didn't say NO ONE would pay for them, he just said most want. Nissan's CEO and others have said the same thing. Its nothing new.

FeZO

The Volt will be able to run using NO gas. Thats a jump beyond the Prius to most people. Prius uses gas under almost all circumstances.

"The 3 and Miata are not efficient cars"
It all depends on how the driver chooses to drive the car, some people choose to drive fast and I dont see why they would not. These two cars are quite fun to drive but you sure do pay at the pump, while some people just put off fun driving to pay less at the pump.

The thing I do not understand is that car companies are making hybrids instead of cars like the Ford Fiesta, its practicle, cool looking, efficient, fun to drive (according to multiple mags), and cheap. These little Fords are as low as 12,000 in europe, but you probably dont get the same features as we are used to. I would be willing to give up power windows, power seats, power mirrors and why buy an automatic when the manual would be much better.

- I want to know where he sourced his percentage figures.

- If they are accurate, why is GM developing one of the more expensive "hybrid" cars?

- Wouldnt it make more sense developing something a bit cheaper so more people could afford it while also chaning the mentality and raising awareness of green vehicles?

If the Volt does end up with a $40K price tag, it'll be competing with the Lexus H250h. I think we all know who will with that market.

In any case, I'm one of those that would never buy a hybrid purely for the environmental impact they cause (battery production).

Also, I too, think car emissions are thoroughly exaggerated. Go after less efficient means of production

I would classify myself as a car enthusiast, and how clean a car is runs pretty high in my book. No, I don't drive a Prius, but I'm equally saddened when I see people with large diesel trucks and illegal exhaust doing sh** like this...

http://www.youtube.com/watch?v=4rtoNv5NrcQ

Anyhow, I'm all for cars that get better mileage, but I'm tired of people using it as a scapegoat for rising oil and gas prices. Folks simply are not driving right now, and when prices were down, folks were not buying hybrids. The way I see it, they're a quick-fix fad, and easy publicity. Prius sales down on the order of 40%??? We simply need more options (clean diesel/biodiesel, li-ion battery, etc), and until that technology comes, we need desperately for somebody to stop the oil companies and speculators from sucking folks' wallets dry at the pump.

Well Mr Lutz , I think the market is proving you wrong ....Hummers, Ford Explorers, and other huge SUV's are sucking air for their very survival. Just because it isnt a true Hybrid doesnt mean there aren't greener alternatives that are also selling ( VW Jetta diesels, "normal" Honda Civics and Toyota Corollas, Honda Fits, Mini Coopers are all green yet are not hybrids. And there are alot more coming... ( Suzuki Swift, Honda CRZ, VW Polo, Mazda 2, Ford Fiesta,Ford Ka, Fiat 500, Audi A1,Mini Cooper D, Nissan Cube,Scion IQ......are all to be introduced in the next 1-2 years in the USA). I can hardly wait.

Lutz is right on the money here. People are cheap, especially the fuel economy minded ones. Most people are also hypocrits - they say they want to be environmentally "aware", but when they find out they have to reach into their wallets more to be "green", or make some non-monetary sacrifices, they'll have none of that.

k55 - Lutz said people aren't willing to pay a premium for a green car. The only cars I would consider "green" on your list would be the VW diesels and hybrids, both of which are more expensive than their regular gasoline counterparts, and all of which combined comprise LESS than 5% of total sales right now. So the market has already proven Lutz correct.

"By estreka on June 10, 2009 4:12 PM
If the Volt does end up with a $40K price tag, it'll be competing with the Lexus H250h. I think we all know who will with that market."

Yeah, the Volt by a landslide. For one thing the Lexus 250h is nothing more than a rebadged Prius, and can't even compare to the technology in the Volt. A plug-in hybrid is in a whole other league versus a traditional hybrid. The Volt will get 100 MPG, or even more depending on how often you're able to recharge it on plug-in versus using the gas engine. The Lexus 250h will barely be able to get 40 MPG, and doesn't have an all-electric mode, like the Volt does.

Plus, the Volt actually looks great. Far better looking than the Lexus 250h, which looks like a Prius had sex with a Corolla, and someone slapped a Lexus symbol on after birth.

"By rksovis on June 10, 2009 9:11 AM
Mr Lutz,
Do you have a job? I didn't think so. "

Yes, Mr. Lutz is employed right now as Vice Chairman of General Motors Corporation. He is retiring at the end of the year. Get your facts straight.

Wagoner was fired by the Obamanator as a sacrifical lamb. Not Lutz.

1st - Time Value of Money. Any financial decisions should be evaluated on value and not price. Hybrids are more expensive. Figuring the time to receive the initial investment in dollar amount through the price of fuel burned is not enough. You must also figure the "time value of money". Finance 305. This figures in inflation, finance costs, taxes, registration and tax rebates into the actual cost. Thus you figure the value of the investment.

2nd - Diminishing Returns. The improvement from 20 MPG to 30 MPG is a 50% gain for the different cost of the vehicle. Improvement from 30 MPG to 40 MPG is 33% and so on. If the cost is the same, the return on investment is far less. This is exponential when combined with "Time Value of Money".

3rd - There is a difference between traditional pollutants and CO2. Traditional ones are factored into acronyms such as ULEV, LEV and so on. Those pollutants are the smog you see in the air and can be addressed by catalysts. Co2 on the other hand cannot. The only known way currently is to simply burn less carbon based fuels.

4th - Relative Value. Power windows are a convenience. Manual transmissions get better MPG and are more fun but less convenient. Achieving MPG over the financially viable cost of above points 2 and 3 provide psychological and real improvement in the environment. These are relative the individual consumer and thus ridiculous to argue.

These are the reasons for Lutz' comments, I believe.

In response to above comments by others.

1st - Toyota hybrid tech was joint developed by GM and Toyota. Synergy Drive was granted to Toyota in 1999 because they were not economically viable in the US so GM passed on its use.

2nd - Corporate execs are not allowed to sell their stock by the SEC until certain criteria are met. That is why they sold when they did.