Frankfurt's All About Hybrids

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Published on 09/14/2005

Frankfurt's All About Hybrids

by Bengt Halvorson

ForbesAutos.com

FRANKFURT, GERMANY ? The buzz at the Frankfurt auto show is all about skyrocketing gasoline prices and a run for the pumps, with some places said to be on the verge of a panic shortage. So with fuel cells still in some distant future, the new breed of hybrids and some decidedly small cars are all the focus today.

In Frankfurt this week Audi revealed a hybrid gasoline-electric version of the Q7, a U.S.-bound luxury sport utility expected here next year.

There has been a curious about-face from the German automakers on hybrids. Just two years ago, a high-ranking official at one German manufacturer maintained that hybrids didn't show much, if any, promise for the European market.

Yet today the tide seems to have changed, and they're making hybrid plans like gangbusters.DaimlerChrysler has already made serious investments in hybrid power trains. In August, the automaker joined forced withGeneral Motors to share the responsibilities of hybrid development, and just last week BMW signed on. Porsche is also developing a hybrid vehicle, and the sports-car maker is cooperating withVolkswagen on hybrids.

Not wasting any time, at this week's Frankfurt auto show, DaimlerChrysler's Mercedes-Benz unveiled several hybrid power trains ? one with a gasoline engine, one with a diesel ? installed in its all-new S-Class flagship, plus a hybrid system installed in its CLK coupe. The automaker said that its first hybrid car would be on sale by the next Frankfurt show, in two years. Audi revealed a hybrid gasoline-electric version of the Q7, a U.S.-bound luxury sport utility headed for the U.S. next year. And the smart crosstown, a city car with Jeep-like design cues such as exposed hinges, even features a hybrid power train. MINI hinted as well that its cars could soon feature a hybrid power train.

All this is a tribute to gasoline prices that are already approaching $7 per gallon at the pump in France, Germany and the U.K., and fuel prices overall are already about 40% higher than a year ago. Meanwhile, European governments are beginning to call for action. The story is similar, though not as serious as in North America, where consumers strain at gasoline that recently passed $3.

With many worried about the threat of inflation, and with the immediate pump-price reality, some of the introductions on the show floor seemed especially timely.

The consensus seems to be that, while fuel cells are at least ten to 15 years out, the immediate gains in fuel economy can be made with hybrids. Especially in the U.S., where diesels haven't been widely adopted and hybrid power trains could produce significant gains on larger vehicles, buyers have a growing appetite for hybrids. And automakers are finally agreeing that even here in Europe, hybrids carry a premium image with a technology that improves fuel economy without sacrifices.

In Frankfurt, with models like the Prius,Toyota Motor looks likely to cash in on concerns about the environment and the hybrid awareness that's already started sweeping Europe. Last year, Toyota sold 8,200 Priuses in the European market. But now the Prius has been named the European car of the year, and by the end of this year, the automaker expects to sell 180,000 of them worldwide including 25,000 in Europe.

Unlike some other recent big international auto shows, and despite escalating energy prices, Frankfurt didn't see any long-range advanced technology announcements on topics like hydrogen initiatives and fuel cells. Most of the announcements from the Frankfurt floor boasted immediate, incremental improvements on new models in fuel economy from modern diesel and gasoline engines.

The Frankfurt show is providing American observers with a glimpse of all the economical minicars that drivers in Europe and many other parts of the world are able to buy. DaimlerChrysler hinted that its rugged-looking little crosstown minicar could be headed for the U.S. But most of the European automakers have balked at bringing smaller vehicles across the Atlantic, complaining that they could have a negative effect on their image. For instance, Mercedes was going to bring its small B-Class models to the U.S., but it recently canceled those plans, and BMW has no plans to bring its 1-Series cars to American markets.

But a fundamental question remains ? would Americans find Euro-sized small cars appealing. Many of these smaller, premium cars probably could be brought to the U.S. market in a profitable way, though as long as gasoline prices stay below a certain point it seems that American buyers will look to larger vehicles.

From an American perspective, looking to Europe could be the solution when gasoline prices soar and consumers' appetites for big, gas-guzzling vehicles disappear. As the industry takes a deep breath to see what's going to happen next with gasoline prices and inflation, one thing's certain: It's an especially difficult time for automakers to plan their products.

From Forbesauto.com