High Times for Hybrids

High Times for Hybrids

Sticker shock at the petrol pump is prompting some car shoppers to reconsider their gas-guzzling ways, driving sales of fuel-efficient vehicles, but investors looking to capitalize on this will need to buckle up, because it may take a long time to profit off the trend.

As a category, hybrid vehicles, which use fuel-efficient combination gas and electric motors, are experiencing explosive growth thanks to rising gas prices. Sales of Toyota's Prius hybrid were up 700% year over year in the month of July, according to Ward's Automotive Research. In July, the car was the fastest-moving vehicle off of dealer lots for the 10th straight month, spending an average of six days there. The car is so popular that Toyota is boosting production by 50% to meet the rising worldwide demand and is unveiling a number of new models, making it a front-runner in the nascent space.

With gasoline prices 33% higher than a year ago as of Aug. 9 and consumers finally excited about a group of vehicles for reasons other than cheap financing and massive rebates, carmakers don't want to miss out on a potential trend.

"It's the fastest-growing category of vehicles in the past several years," said Jesse Toprak, director of pricing and market analyst at Edmunds.com. "There are a lot of products in the market coming in, like the Ford Escape, the Lexus RX400h -- they're all coming out with something."

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Jeff