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Unprecedented numbers of hybrid cars on display at this month’s Detroit International Auto Show signify that the industry is taking the technology increasingly seriously.

Petrol-electric vehicles, launched or shown as concepts, broke out of the mould of small saloons designed for economy and embraced market segments from 4x4s to sports cars.

Toyota’s sleek new Prius, the surprise choice as North American Car of the Year, is bigger than its ungainly predecessor, competing with cars in the Mondeo class. Higher than expected demand for the car, launched last autumn, has prompted Toyota to increase production.

The Detroit launch of two sport-utility vehicles, claimed to be the world’s first, takes Toyota’s hybrid model count to eight. Both the Toyota Highlander and the more luxurious Lexus RX400h use a 3.3-litre V6 engine coupled with an electric motor to generate 270bhp. The combination is said to provide the performance of a 4-litre petrol engine with economy better than the 27.6mpg of the average ‘compact sedan’.

The Lexus goes on sale in the US and UK towards the end of this year. The Highlander will follow in early 2005 in the US only.

Honda president Takeo Fukui, speaking at Detroit, promised a hybrid version of the Accord to join the Civic IMA (integrated motor assist) later this year. It will have a V6 petrol engine with performance exceeding the normal Accord V6 but the economy of a petrol Civic.

Mitsubishi showed the V6 3.8-litre Eclipse Concept-E sports car with four-wheel drive, the front wheels driven by the petrol engine and electric motor, the rear wheels by the electric motor only. DaimlerChrysler showed the hybrid Vision grand tourer and promised a hybrid version of its Dodge Ram pick-up.

But are big-engined hybrids defeating the original object of developing cars with better economy and lower emissions?

Nick Owen, senior technology manager at consultant Ricardo, said: ‘SUVs are profitable products and car makers would not want to see public opinion or legislation turning against them, so they want to show that even an SUV can be environmentally responsible. It’s not just about products being economical but about the cars people buy and want to buy.’

Because SUVs command a price premium in the US but are not particularly sophisticated technically, they have high enough profit margins to absorb the cost of hybrid technology as well as the physical space to package it.

Sceptics originally dismissed hybrids such as the Prius and Honda’s Insight as inevitably loss-making. Toyota has now sold 130,000 of the mark 1 Prius worldwide.

‘Honda and Toyota have committed themselves to a long-term strategy and borne a lot of the R&D costs,’ said Owen. ‘My suspicion is that they’re getting to the point where incremental sales are not costing money.’

Meanwhile, industry veteran Lee Lacocca has warned US car makers to act fast to develop home-grown hybrids or risk losing the market to the Japanese.

The enthusiasm for hybrids shown in Japan and the US (particularly California) has not so far been replicated in Europe either among buyers or car makers. PSA Peugeot Citroën vice-president for platforms, engineering and purchasing, Gilles Michel, recently said that the company did not see hybrids as ‘a viable economic proposal’ either now or in the immediate future. Is Europe in danger of abandoning the market?

‘In Europe petrol hybrids come up against the ‘why not buy a diesel?’ argument,’ said Owen. This is why the Ricardo/Valeo mild hybrid/prototype demonstrator i-MoGen was based on a diesel Astra.

But he believes Europe is at a pivotal point, especially if the proposed agreement is confirmed between the European Commission and car makers to limit fleet average carbon dioxide emissions to 120g/km by 2012.

‘Over the past decade the European market has invested in diesel as the mainstay of its efforts to use less fuel and, if governments continue to seek reductions, diesel technology is not going to be enough.

‘Hybrid is not a cheap technology, but if you are going to reduce CO2 it’s probably the least expensive way to do it. Hybrids evolve out of existing conventional vehicles and you don’t have to completely redefine the car, as shown by the Civic IMA and i-MoGen. It will probably be another 20 years before we see mass-produced niche vehicles – the equivalent of the Prius – powered by fuel cells,’ Owen said.

Meanwhile, Mercedes is following Volkswagen in trying to create a niche for diesel passenger cars in the US. At Detroit it launched the E320 CDI which it will market by stressing the hi-tech credentials and driveability of its common rail injection engine.

Until VW launched its TDI diesels recently, there had been no diesel passenger cars on the US market since the late 1990s. In the 1970s and 80s they had gained a bad reputation after US makers launched cars with inferior diesel engines. Diesel is less widespread in the US than Europe and low-sulphur fuel not available at all at present.

But with their high torque at low revs, diesels are well suited to the US market and common rail technology has led to a step change in driveability and refinement.

Mercedes is hoping sales will build gradually and has set a target of 3,000 this year from the April launch of the E320. ‘We need to educate people about the benefits of common rail direct injection,’ said a spokesman.

Ricardo’s Owen said: ‘Nobody knows where the US market for this type of vehicle is going. But the prospect of a large market there for diesel is exciting for the European industry because we have the technology.’