High gasoline prices, meanwhile, are helping drive a record market in gas/electric cars this year. Still, with a profusion of hybrid cars in market now and more coming, Toyota's Prius rules, and consultancies say the car will continue to do so: Toyota sold a record 16,062 Priuses last month--a dizzying 50% increase versus the month last year. Year to date, the company saw an 85% increase through July versus the period in 2006. Toyota reported that among all of its hybrids, it saw a 59% increase in sales in the period.

Toyota, which plans to offer hybrid-powertrain versions of its entire portfolio by 2012, now sells gas/electric versions of four other vehicles, but all of those combined don't come near sales of Prius.

"Prius is a stand-alone car--it makes a statement on its own," says George Magliano, director of automotive research for the Americas at Global Insight, Lexington, Mass. "You see it on the road and know it's a hybrid. And the issue with this type of vehicle is that people want you to know they have a hybrid."

Dan Gorrell, president of Auto Stratagem, a research and consulting firm in Tustin, Calif., concurs. "Consider the hybrid Highlander (SUV). It hasn't sold well, partly because it violates a major issue: you need to look different. A lot of why people are buying hybrids has to do with being noticed; it's a self-esteem issue."

Gorrell says the efforts are driven in no small part by publicity and automakers' desire to position themselves as progressive. "There's been a lot of me-too's. Press has put pressures on manufacturers, and it's gotten into the image arena because if one isn't offering a hybrid then one is an evil gas guzzler. Toyota has played the hybrid card in an interesting way to promote its corporate image."

Toyota has been moving hybrid metal by offering incentives earlier this year--to offset the government's rescinding of the federal consumer tax break on hybrid purchases--on a car that used to have a six-month waiting list. Although there are now 11 hybrid models for sale in the U.S. market, Prius still accounts for over 50% of all new hybrid vehicles bought in the U.S. According to J.D. Power & Associates, it will continue to dominate.

The firm also sees hybrids achieving record sales this year, with a 35% increase in sales of such vehicles versus 2006. In the U.S., automakers have sold about 187,000 such vehicles through June of this year, and the firm says the industry is on track to reach 345,000 unit-sales this year on a strong first half.

Among current hybrid-version models sold in the U.S.: Toyota's Camry, Highlander, Prius and Lexus GS car and RX SUV; Ford's Escape and Mercury Mariner; GM's Saturn Vue and Aura; Honda's Civic and (for now) Accord; and Nissan's Altima hybrid. The latter uses Toyota technology, but Nissan hasn't marketed the vehicle and has only sold 2,800 units this year.

On the domestic side, Ford has sold over 11,000 units of its Escape hybrid in the first half of this year.

Indeed, not all hybrids are selling well. Honda has seen a modest 6% increase in sales of its hybrid-version Civic this year--but is discontinuing the hybrid version of the Accord sedan, of which it has only sold 2,304 this year, as it sells down inventory.

"The hybrid Accord was the wrong price and the wrong concept," says Gorrell, who says Honda's mistake was marketing the car for performance. "People buy hybrids for fuel economy, and they clearly weren't getting that with the hybrid Accord."

General Motors' Saturn division has hybrids under the Green Line sub-brand of the Vue crossover and Aura sedan. The latter is touted as the lowest-priced hybrid on the market. "I think that GM is doing well with lesser technology partly because the vehicles aren't priced at a premium either, so it's a step in the right direction," he says.

Mike Omotoso, senior manager, Global Powertrain at J.D. Power, says GM's price premium is between $1,000 and $1,500. GM has sold less than 1,000 of its Aura hybrids since it went on sale in April.

Omotoso says Prius has done so well because it fires on all cylinders with a unique look and a pure hybrid powertrain (versus hybrid-assist versions) and market adjustments offering lower-priced versions. "You can see from a hundred yards away, it is the only one of the group that can run completely on electric, and it has the best fuel economy out of all of them. Honda sells 300,000 Civics per year, and the hybrid portion is 10% of that--and from a distance it looks like a Civic," he says.

According to J.D. Power, people are willing to pay a price premium of $2,400 for a hybrid. "One of the reasons the Accord hybrid failed is that it carried a $3,700 premium," he says, adding that it would take ten years to recoup that cost if one were saving $350 per year in gas costs using the car.

He says the Camry hybrid is the second-highest-selling hybrid car, followed by the Civic hybrid. Among hybrid-powered SUVs, the Toyota Highlander is the top seller, says Omotoso. "Toyota has credibility. They have done a great job of marketing themselves as hybrid leaders, and the Highlander--the non-hybrid version--is already a high-selling truck."

J.D. Power says the industry will get an infusion of 65 hybrid models--28 cars and 37 light trucks--by 2010, with sales expected to reach nearly 775,000 units, or 4.6% of the total U.S. new light-vehicle market. Both Toyota and GM are testing plug-in hybrids.

Among the seven new hybrids coming into the market are hybrid versions of Ford Fusion and Mercury Milan sedan; Chevy Malibu; Hyundai Santa Fe; and Toyota Sienna minivan. General Motors will also offer full hybrids on its Yukon, Escalade and Tahoe trucks. Lexus is the first to launch an ultra-premium hybrid with the $104,000 LS 600h, on sale this summer.

Gorrell says the winners in the hybrid wars will be the ones offering the whole package. "The key will be--do they look different, how are they priced and do they offer that much of an advantage? It had better offer gasoline advantages and look different. That's what's required."

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