• by Karl Greenberg , April 10, 2007

AutoNation, which owns and operates 327 new-vehicle franchises in 16 states, is launching a program today to help people find hybrid and other greener and more fuel-efficient cars. The program, E-Vehicle, promotes vehicles online or in AutoNation dealerships that get 28 miles per gallon or better or deliver 10% better fuel efficiency than vehicles in their class.

AutoNation is linking with Edmunds.com to identify qualifying vehicles, which also includes a second category: flex-fuel vehicles that can run on a combination of gasoline and ethanol.

Under the program, vehicles online or at dealers that meet the E-Vehicle standards get a green leaf-shaped logo and a checklist detailing the vehicle's efficiency qualifications that make it "verdant."

Flex-fuel cars and trucks get a yellow leaf sticker. AutoNation says that the move is a corporate goodwill effort aimed at "promoting the greater consumption of renewable and alternative energy sources will motivate energy companies to more aggressively pursue the production and distribution of non-fossil-based fuels, a critical component of a more responsible energy policy."

Similarly, Yahoo! Autos last year partnered with non-profit Environmental Defense to launch Yahoo Autos Green Center, a microsite offering information, resources and a community about and dedicated to alternative fuel vehicles. The company has been advertising the program online. The site includes, like AutoNation's, a Green Rating which determines the environmental impact of any vehicle on a scale of 1-100. Yahoo promoted the launch of the program with a land-speed time trial with a vehicle powered by grease.

Yahoo, which has done very little promoting around the Green Center, has garnered twice the volume of visitor traffic this year than it had anticipated, per a spokesperson. When Yahoo launched the program at the Specialty Equipment Manufacturers Association show in Las Vegas, online traffic to the Green Center made November Yahoo Auto's largest month, bumping the site up to second place behind eBay Motors. Yahoo promotes the site only on its own portal, and Ford recently signed on as lead sponsor to promote its Escape hybrid SUV. Jesse Toprak, an automotive industry consultant at Edmunds.com, says the market for compact cars, hybrids and fuel efficiency in general is booming, with hybrids' share of the U.S. market last month topping out at 2.2%, its highest ever. "That shows there's an increasing demand for hybrids, and alternative fuel, and compact vehicles with smaller conventional engines," he says.

He adds that the compact-car category has been the fastest-growing segment in the last four years. In March 2004, per Edmunds, compact cars constituted 14.7% of the U.S. market. Last month, compact cars were 17.5% of the market. Meanwhile, incentive spending for the category has dropped, even as the market has expanded. Toprak says the average per-vehicle incentive for compacts was $1,800 in March 2004. "Now it's $1,100, even though the market is growing."

Toyota, which sold 100,000 Priuses last year, began putting incentives on the vehicle this year, in anticipation of higher volume this year - they want to sell around 175,000 of the cars this year, a 75% increase in volume. "When you have that big an increase," says Toprak, "you expect demand to drop." He says the average incentive for hybrids - of which Prius constitutes the largest volume, was $500 in January. It went up to $1,600 soon after.

This month, Toyota lowered the Prius sticker price dramatically. Prius accounted for 20,000 vehicles Toyota sold last month, which was the highest monthly sales figure ever for Prius. "Even Toyota acknowledges that volume is not sustainable, but that the 12,000-to-15,000 range is more in line with their projections."

Toyota also had its best-ever month for the Camry hybrid, selling 5,144 with no incentives. Toprak predicts the market for alternative-fuel vehicles will continue to grow but that hybrid gasoline/electric vehicles like Prius will be constrained by diesel, flex-fuel and other technologies.

AutoNation says the most popular fuel-efficiency vehicles on its channel are Toyota Prius, the Honda Civic Hybrid, the mid-size Chevy Malibu and the Mercedes-Benz Diesel. According to research by CNW Market Research, Bandon, Ore., among a list of purchase consideration, fuel economy ranks below cupholders and above luggage capacity as reasons to buy a vehicle. Much more important to American consumers are monthly payments, manufacturer reputation and overall quality.