24th May 2004
Friday, July 30th, 2010
The hybrids are coming
Suzuki presented the Polish press with its 'Twin' hybrid on Wednesday, amidst an oil price surge that is increasing demand for a new generation of cars that consume less petroleum and are also powered by alternative power sources.
With one of the fastest growing auto markets in the world, Poland looks set to take a front seat in the oncoming hybrid car revolution.
Demand for hybrid cars has rocketed in recent months, with some analysts pointing to technological change that has made hybrid engines more affordable. Others say that the hybrid engine is an innovation that has never been tested on the market - and the market is vastly more hungry for silent, smooth, ecologically friendly engines than had been previously imagined.
But there are also those who say that oil prices - propelled by Middle Eastern instability and the rise of big new consumers such as China - have reached a threshold that is finally turning away consumers. Arguably, one of the two biggest issues facing the world today, energy security and environmental preservation, are addressed by hybrid technology.
In this sense, the First World's - particularly America's - thirst for oil may not be quenched by the securing of international oil supplies but rather in research labs in the USA and Japan. Hybrid technology will surely reduce demand for oil, the consumption of it and America's dependence on the Middle East.
Often, innovation is driven by entrepreneurship, a search for new markets. In this case, the innovation of the hybrid is arguably driven by rising costs and by the established market leaders' need to survive.
The Suzuki Twin, as its name suggests, is a two-seater comparable to the Smart car. "Before we launch the Twin in Poland, we are watching the sale of Smarts," says the firm's Marcin Glajzer. "But the difference with the Twin is that it is the first Suzuki model with a hybrid power system.
"The electric engine assists the work of the internal combustion unit when starting, accelerating, or driving uphill, allowing it to significantly lower gas use and to limit the emission of harmful substances into the atmosphere." When reducing speed, the energy produced by the car is turned into electrical energy and used to charge the battery, which has a capacity of 6.3 Ah and a voltage of 192 V.
During vehicle stops, the hybrid control system tautomatically throws the engine out of gear, creating yet lower carbon dioxide emissions.
"The model equipped with the hybrid engine is especially popular among national and local Japanese authorities, who want to emphasize that they not only appreciate the comfort, but also the ecological benefits," Suzuki states. Clearly, the biggest value of bringing their hybrid car to Poland lies in the value it brings to the Suzuki brand, reinforcing the message of high technology and efficiency.
"In order to be more engaged in the Polish market, we have rebuilt our distribution network, and we actively introduce new models of cars to the market," says Harumichi Uto, president of Suzuki Motor Poland. "We would also like to consolidate the image of Suzuki as the manufacturer of reliable and economical cars."
The demonstration of the Twin hybrid was used as a feature at the launch of the Suzuki Liana last week. "Liana is a typical family car for people with whom the comfort and security of their family are the most important things during the drive," Uto explains. "I do hope that Polish customers will appreciate this model, as happened with the Ignis."
The biggest Japanese car maker in Poland, Toyota, which is in third place on the domestic market behind Fiat and Skoda, is set to launch its second generation hybrid, the Prius, within the coming weeks.
"Delivery by July depends on world demand for these cars, which is much higher than expected. Due to demand in the USA, this delivery could be later," says Jan Okulicz, Toyota's PR manager.
"High demand may have less to do with world oil prices than the fact that the market for these cars is untested," he adds. "Places with high ecological awareness, such as California, are leading the way, not least with such high-profile film stars as Leonardo di Caprio opting for hybrids."
Okulicz points out that the big value of a hybrid is still the effect of innovation on his company's brand. "Hybrid cars are really not going to be a huge part of our sales figures in the near future, but they will help with our brand image of Toyota as a pioneer." The price range of the new Prius will be comparable to the Toyota Avensis, which runs at zł.107,389-116,727 (E23,000-25,000).
Currently, there are 20,000 hybrids in the state of California, and that number is expected to rise by more than 500 percent across the next four years. "The attitudes and opinions about economics, technology, and the environment held by owners of hybrid-electric cars distinguish them from other groups," says a report by marketing group JD Power and Associates, quoted in Tech Central Station. "Issues on which the owners of hybrid-electric cars hold extreme positions are: interest in helping reduce vehicle pollution, willingness to pay extra for 'green' products, and thinking of oneself as an avid recycler."
But concurring with the notion that hybrid car demand is rising only partly thanks to environmental awareness, the report asserts that "owners of hybrid-electric cars also have the most extreme expectations that fuel prices will be higher in the future."
Some oil experts believe that the current oil price hike has been buoyed by unusual short-term factors, including political instability in Venezuela and Nigeria, aside from the ever-prominent and rapidly deteriorating Iraq.
When Venezuela and Nigeria re-stabilize, and when new sources (primarily from the Caspian region) come on-line, world oil prices may start to fall. But in the medium term, predictions tend to see world production falling.
In this respect, the current oil price spike (and possibly the related hybrid car demand surge) is a dry run of a more permanent price rise in the medium term. The only realistic solution to world oil scarcity is surely a reduction in consumption.
For consumers, the switch to hybrid cars may be relatively easy. For governments who siphon up to 80 percent of petrol-pump price off to the Treasury, a crucial source of state revenue will be in mortal danger.
Edyta Iroko, marketing manager, TNT Express Worldwide (Poland)
For TNT Express, a global business-to-business express carrier operating in over 220 countries, oil and petrol prices are the most significant factor in the company's budget. In our current financial plan, we've anticipated the cost of one liter of unleaded petrol to not exceed zł.3.95. We adjust our plan on an ongoing basis.
Prices of fuel directly influence our level of profitability. We accomplish our services using a fleet that includes thousands of vehicles and airplanes. In the case of significant fluctuation in fuel prices, the effect on our margins can be quite substantial. In these circumstances, financing growth with the current margin is not always possible. Sometimes it should be rendered at the level of our service prices.
Paul L. Craig, president, Trading Bay Energy Corporation
As an Alaskan involved in the identification and exploitation of oil and gas prospects, higher oil prices are music to my ears. In today's marketplace, with turmoil in the Middle East and soaring oil and gas prices, companies have begun knocking on my door, looking for the type of opportunities available within Trading Bay's portfolio of prospects. In addition to involvement in the Alaskan oil patch, I have invested heavily in FX Energy, a publicly-traded exploration and production company that has all the ingredients for creating wealth for shareholders during the next three to five years through the discovery and production of hydrocarbons in Poland. They are properly capitalized to move forward with a program of exploratory drilling at multiple prospective sites.
At a self-serving level, as the owner of a nascent oil and gas company, I am delighted with higher hydrocarbon prices. As a world citizen, I am aware that stability and predictability with regard to cost of the 'blood' of capitalism is important to keep the heart of the world economy beating in the best interests of one and all.
Leszek Chorzewski, LOT Polish Airlines spokesperson:
Purchases of fuel constitute a significant proportion of our company's total costs (around 15 percent), hence we closely monitor and analyze market trends, both on a day-to-day basis and in the longer term - a maximum of two years - in both monthly and quarterly cycles. Such attention to detail results from the seasonal nature of the airline business (fuel consumption in the summer can be higher by as much as 50 percent), which in turn makes it necessary to plan correctly for future liabilities connected to fuel purchases. Thanks to hedging against future price rises through the use of derivative financial instruments, we have managed to lower costs of fuel in the first four months of the year by an average zł.100.9 ($26) per tonne. Our hedging policy is clearly set out in the company's strategy. Due to the long-term nature of the hedging strategy, the company is still benefiting substantially from transactions closed a long time ago.
Stanislav Saling, public relations manager, SkyEurope Airlines
SkyEurope Airlines will remain the leading low-cost airline in Central Europe, with fares from zł.99, regardless of any temporary changes in commodity prices. SkyEurope has already carried more than 500,000 passengers to and from Central Europe. Throughout its three years of operations, SkyEurope has gained an exceptional reputation with passengers, investors and other stakeholders.
The international team of professionals at SkyEurope would therefore rather seek to lower its costs per unit than to increase fares. SkyEurope is, with bases in Warsaw, Budapest, Vienna-Bratislava and Kosice, ready to surpass any other low-fare airline that is based, or planning to be based, in Central Europe. SkyEurope has invested $20 million (zł.78.1million) in Poland, where it is negotiating with several airports to open another base.
SkyEurope operates a fleet of 13 aircraft and has renowned international investors, including the European Bank for Reconstruction and Development and ABN Amro. The carrier's top team, route network, dedicated investors and extensive experience in low-cost operations in Central Europe make SkyEurope the best positioned to lead the market while keeping its low fares intact.
From Warsaw Business Journal by Kamil Tchorek
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