California continues to lead the nation in hybrid vehicle registrations (Table 1). Los Angeles, San Francisco and San Diego contribute to the state's leadership with more registrations than any other metropolitan market, combining for 22.3 percent of all hybrid registrations (Table 2).

"Consumers know that hybrids are important to the environment, but they are not the only option," said Lonnie Miller, director of Industry Analysis for R. L. Polk & Co. "Automakers still have obstacles to overcome to prove the merit of owning a hybrid, including educating customers about developing hybrid technology; debunking the myth that hybrids are only needed when gas prices rise and general apathy or risk averse attitudes toward the relatively new-to-market technology. The challenge is for automakers to stay the course and to continue exploring fuel-efficient viable options for next-generation vehicles."

Overall, the hybrid category reflects just over 1.5 percent of all new vehicle registrations in the U.S. For the third year in a row, Toyota Prius led the segment with 42.8 percent of new registrations.

"The Prius continues to set the pace for this category. However, with several models debuting over the next two years, and many in the works for the near future, Toyota market share will be challenged. We will see if it can maintain its foothold at the top," said Miller.

Following the Toyota Prius, the Toyota Highlander was the second most- registered hybrid model, taking 12.5 percent of the category, followed by the Honda Civic, with 12.3 percent of all new hybrid registrations. Combined, Toyota and Lexus had more than 75 percent of all new hybrid registrations in 2006.

The core set of hybrid vehicles offered today are automobiles powered by internal combustion engines, and are equipped with batteries recharged during driving and an electric motor to assist with power demand. Hybrids deliver exceptional mileage compared to their gas-only counterparts and are considered environmentally-friendly alternatives to traditional internal combustion engine vehicles.

CONSUMER REACTION

In mid-2006, the Polk Center for Automotive Studies conducted a poll of over 700 consumers regarding their hybrid viewpoints. More than half of respondents strongly or somewhat believe every vehicle sold today should have a hybrid version offered. Similarly, nearly 50 percent of participants support paying for fuel-efficient technology now so later generations can benefit.

"It can be challenging to get consumers to think long term with their vehicle purchases, but these results are encouraging," said Miller. "The fact

that many Americans are familiar with and interested in fuel-efficient technology on a base level is influential to the industry."