The Future of Hybrid Electric Vehicles
Introduction
Honda is a well-known and reputable car manufacturer in North America. It is now 2002, and Honda is planning on launching its second Hybrid Electric Vehicle (HEV) to the market - a hybrid version of Honda's top selling vehicle, the Civic. The company's first HEV, the two-seater Honda Insight coupe, was introduced to the U.S. in 1999. It experienced modest sales of 3,788 units in 2000 and 5,000 units in 2001 and retailed at a base price of approximately $19,100. However, demand outstripped supply and consumers were forced to wait between one to two months for their vehicles.
Honda anticipates that sales of the hybrid Civic model will be much stronger than previous HEV models, since the Civic already possesses a longstanding, strong brand name. Right now, Honda must decide if they are willing to launch the hybrid Civic and make it a part of its production line-up, despite the uncertain reception of the vehicle in the market and the risk of a potential loss in profits.
Problem Statement
The problem that Honda faces right now, which could hurt the company’s overall profits, is that consumers are not well educated and informed about the benefits that this hybrid technology can offer. In other words, the positive features of a HEV have not been marketed well enough to change buyers’ outlook on transportation options and train them to look beyond the price premium (of up to $5,000) and buy a hybrid car. According to a large-sample survey of recent car buyers, the top three factors that were identified as being most important when purchasing a car were “reliability”, “value for the money” and “well-made vehicle”. Similarly, auto dealers stated that buyers routinely ranked “functionality”, “safety” and “price” as important factors when shopping for a car. Factors, such as “gas mileage”, “technical innovation” and “environmentally friendly” were also listed, but were all ranked well below the top five. Therefore, Honda is faced with the
Honda is a well-known and reputable car manufacturer in North America. It is now 2002, and Honda is planning on launching its second Hybrid Electric Vehicle (HEV) to the market - a hybrid version of Honda's top selling vehicle, the Civic. The company's first HEV, the two-seater Honda Insight coupe, was introduced to the U.S. in 1999. It experienced modest sales of 3,788 units in 2000 and 5,000 units in 2001 and retailed at a base price of approximately $19,100. However, demand outstripped supply and consumers were forced to wait between one to two months for their vehicles.
Honda anticipates that sales of the hybrid Civic model will be much stronger than previous HEV models, since the Civic already possesses a longstanding, strong brand name. Right now, Honda must decide if they are willing to launch the hybrid Civic and make it a part of its production line-up, despite the uncertain reception of the vehicle in the market and the risk of a potential loss in profits.
Problem Statement
The problem that Honda faces right now, which could hurt the company’s overall profits, is that consumers are not well educated and informed about the benefits that this hybrid technology can offer. In other words, the positive features of a HEV have not been marketed well enough to change buyers’ outlook on transportation options and train them to look beyond the price premium (of up to $5,000) and buy a hybrid car. According to a large-sample survey of recent car buyers, the top three factors that were identified as being most important when purchasing a car were “reliability”, “value for the money” and “well-made vehicle”. Similarly, auto dealers stated that buyers routinely ranked “functionality”, “safety” and “price” as important factors when shopping for a car. Factors, such as “gas mileage”, “technical innovation” and “environmentally friendly” were also listed, but were all ranked well below the top five. Therefore, Honda is faced with the