Great time to buy a Hybrid

[BridgeTroll]

http://www.latimes.com/business/la-fi-hybrid17-2009mar17,0,6682265.story

Hybrid car sales go from 60 to 0 at breakneck speed

The gas-electric vehicles are piling up on dealers' lots as anxiety over gasoline prices evaporates. But more hybrid models are on the way.

By Ken Bensinger
March 17, 2009

The Ford and Honda hybrids due out this month are among dozens planned for the coming years as automakers try to meet new fuel-efficiency standards and please politicians overseeing the industry's multibillion-dollar bailout.

Unfortunately for the automakers, hybrids are a tough sell these days.

Americans have cut back on buying vehicles of all types as the economy continues its slide. But the slowdown has been particularly brutal for hybrids, which use electricity and gasoline as power sources. They were the industry's darling just last summer, but sales have collapsed as consumers refuse to pay a premium for a fuel-efficient vehicle now that the average price of a gallon of gasoline nationally has slipped below $2.

"When gas prices came down, the priority of buying a hybrid fell off quite quickly," said Wes Brown, a partner at Los Angeles-based market research firm Iceology. "Yet even as consumer interest declined, the manufacturers have continued to pump them out."

Last month, only 15,144 hybrids sold nationwide, down almost two-thirds from April, when the segment's sales peaked and gas averaged $3.57 a gallon. That's far larger than the drop in industry sales for the period and scarcely a better showing than January, when hybrid sales were at their lowest since early 2005.

In July, U.S. Toyota dealers didn't have enough Prius models in stock to last two days, and many were charging thousands of dollars above sticker price for the few they had.

Today there are about 80 days' worth on hand, and dealers are working much harder -- even with the help of $500 factory rebates -- to move the egg-shaped gas-savers off lots from Santa Monica to Miami.

This month, Honda is offering $2,000 in cash, financing and leasing incentives to buyers of the formerly sold-out Civic hybrid, while a dealer in northern Michigan is dangling $6,000 cash back to those willing to buy a hulking Chevy Tahoe hybrid.

Yet automakers believe they have little choice but to make more hybrids. Though car buyers are losing interest, politicians are pushing them as key to reducing U.S. dependence on foreign oil and limiting the global-warming gases that cars emit into the atmosphere.

In January, President Obama called on the industry to "thrive by building the cars of tomorrow" and prepare for federal and state regulations that could push average fuel economy above 40 miles per gallon by 2020.

"The automakers are in the situation of needing to pacify politicians that are in the position to bail them out with expensive fuel-efficient cars," said Rebecca Lindland, auto analyst with IHS Global Insight. "But shouldn't it be more about satisfying the needs of the American consumer?"

Dubbed the Prius-fighter because of its similar looks and performance, the new Honda Insight hybrid is set to arrive on dealer lots in the next few weeks. Next year, the Japanese automaker will make a sporty hybrid coupe. Hyundai and Audi will deliver their first hybrids in 2010, and Toyota has a redesigned Prius and a new Lexus hybrid coming this spring. Toyota said Friday that it would make a subcompact hybrid priced below $20,000 in 2011.

The biggest push is coming from Detroit. Ford plans to follow its new 41-mile-per-gallon Fusion and Mercury Milan hybrids with a battery-powered van in 2010 and a "family" of hybrids by 2012. And last month, in their request to the Obama administration for $21.6 billion in additional bailout cash, both General Motors and Chrysler announced a hybrid onslaught.

Chrysler promised eight new hybrids or electric vehicles by 2015, and GM, which already sells eight hybrids, said 26 of the 33 cars it sells in 2015 won't run on gas alone, including the Chevrolet Volt, a plug-in hybrid due out next year.

The hybrid flood marks a lasting commitment to a powertrain technology that currently represents only about 2% of U.S. vehicle sales and, by most accounts, is deeply unprofitable.

Toyota said last year that it was finally making money on the Prius after nearly a decade producing it, but executives at other automakers acknowledge that they lose money on every hybrid sold. "If we were making money on the Civic hybrid, we weren't making a lot," Honda spokesman Chris Martin said.

That may help explain why fewer than 2 of every 100 Chevy Malibus sold last month had the hybrid powertrain and why Ford priced its new hybrid Fusion, which dealers expect to start receiving this month, $8,000 above the gasoline-only version.

Ford expects to produce about 20,000 Fusion and Milan hybrids this year, or about 1% of its total production.

"It's a tough time to bring out almost any product right now," said George Pipas, the company's chief sales analyst. "But getting hybrids out right now is as much about image as anything else."

In November, months before Honda even announced the price of its new Insight, Jim Johnson of Eagan, Minn., plunked down a $500 deposit for one.

"I asked to be on the waiting list, and the salesman said he didn't have one," said Johnson, who works in investments. "So I said, 'OK, I want you to start a waiting list.' "

As evident on the streets of cities such as Los Angeles and San Francisco, hybrids have an almost cult-like following, but getting the masses to buy them with any consistency is another matter. In their zeal to meet what seemed an insatiable appetite for hybrids in the middle of last year, carmakers may have gone too far, said IHS Global Insight's Lindland.

At the end of June, AutoNation, the country's largest chain of new-car dealerships, had only a two-day supply of Honda Civic hybrids and a 14-day supply of the non-hybrid Civic. By year's end, the picture had flipped, with AutoNation holding 107 days' worth of regular Civics, compared with 148 days' stock of the hybrid version.

In December, Toyota terminated plans to build the Prius in a $1.3-billion plant it had built in Mississippi, and Chrysler closed its only hybrid-producing factory.

"The price of gasoline dictates what people buy," AutoNation Chief Executive Mike Jackson said. "Gas fell to $2, and now my lots are filled up with fuel-efficient cars that aren't moving."

Consumers who do buy these days tend to focus more on present-day arithmetic than long-term commodity speculation.

Three weeks ago, Jerome Haig, a lawyer in Torrance, put down a $500 deposit on a Fusion hybrid, even though he hasn't even test-driven one because they have yet to hit lots. "I do like the idea of getting a hybrid," Haig said.

But he concedes that he might not have considered the car had it not been for a $3,400 tax credit on Ford hybrids and a deduction on new-car sales tax. The latter was part of the $787-billion federal stimulus package. "The tax advantages are a pretty big incentive."

A sales-tax deduction does little to move vehicles like the $74,085 Cadillac Escalade hybrid or the Lexus LS600h, which starts at $105,885. Neither gets better than 21 mpg, and buyers pay a premium over similar gasoline-only vehicles that would take decades for owners to equal in fuel savings even if gas hit $5 a gallon. So far this year, only 415 of the pair have sold nationwide.

Still, some consumers see the depressed hybrid market as a buying opportunity.

Chad Gallagher, a lawyer in Berkeley, took advantage of a Presidents Day promotion, plus a healthy measure of dealer desperation, to buy a fully loaded Prius last month for $5,000 under sticker price.

"We got the touring package, leather seats, navigation, Bluetooth, everything," Gallagher said.

"I think they were just happy to sell the thing."

[Jason]

Just try to maintain one of those things or foot the bill when something breaks.  That's my problem with the things.  You have to be a rocket scietist to work on them and a millionaire to afford parts.

[BridgeTroll]

I have always wondered about that.  Do you have one Jason?

[BridgeTroll]

Here is an article from Edmunds.  It is a few months old though...

http://www.edmunds.com/advice/hybridcars/articles/103708/article.html

The Real Costs of Owning a Hybrid
Do Savings Offset the Higher Price?
By Tara Baukus Mello
Email
Date Posted 07-23-2008
As the number and type of hybrid cars grow, consumer interest in these vehicles increases as well. What initially appealed to a select group of environmentalists is now being bought and considered by more mainstream buyers.

But let's face it: The sticker price of a hybrid vehicle is significantly higher than its gasoline-powered counterpart. Does the improved fuel economy offset the extra cost? What happens if the hybrid drivetrain breaks?

We looked at a variety of issues and talked with hybrid owners and manufacturers to learn the real costs of owning one of these high-tech cars.

Price Premium vs. Incentives
Not counting the Lexus models, hybrid cars cost roughly $1,700 to $11,200 more than comparably equipped gasoline vehicles. However, buyers can offset that premium with a federal tax credit, part of the Energy Policy Act of 2005. The tax credit provides a dollar-for-dollar reduction in the tax bill and go as high as $3,000, depending on the model.

The hitch? Once a manufacturer sells 60,000 vehicles, the credit gradually decreases over a period of 15 months until it is phased out entirely. While the act keeps the tax credit in effect until 2010, Toyota has already reached its cap, and credit for Toyota and Lexus vehicles has been phased out. As of January 1, 2009, credits will no longer be available for Honda. (More details on hybrid tax credits are explained here.)

Making the deal even sweeter, several states offer tax deductions and incentives for hybrid purchases. The rebates vary from state to state, but when combined with the available federal tax credits, they can add up to substantial savings.

Some states also allow a hybrid owner to drive in the carpool lane, while others give discounts or free parking. A list of available federal incentives is available at Edmunds.com hybrid car tax credits page, as well as state and private hybrid incentives available at Hybrid Center.

Insurance Changes
Preliminary research by insurance companies indicates that drivers of hybrid vehicles have a lower risk of being involved in an accident than drivers of non-hybrid vehicles. As a result, Farmers Insurance currently offers a 5 percent discount to hybrid vehicle owners depending on their state, while Travelers Insurance offers a 10 percent discount to hybrid owners nationwide. But there are cases in which insurers will charge a higher premium for a hybrid, so it's important to ask your agent. If you insurer does charge more, you may want to shop around for one that doesn't.

Repairs â€" No Worries
Hybrid critics warn of potentially expensive repairs associated with the hybrid-specific parts, such as battery packs. "I was a little concerned initially," said Lydia Segal of Alexandria, Virginia, who owns a Lexus RX 400h , "but Toyota's had its hybrid technology out for quite a while now. Plus, I did a lot of research on the Internet and couldn't find anyone who had a problem with the hybrid system."

And there doesn't seem much reason to worry. All the hybrid-specific components in every hybrid vehicle currently on the market are covered under warranty for eight years/100,000 miles or 10 years/150,000 miles, depending on the state, but these components have been shown to have a much longer lifespan in testing. Toyota, for example, reports that its battery packs have lasted for more than 180,000 miles in testing. Every hybrid manufacturer reports that it has conducted testing of hybrid components in extreme temperatures and with repeated charge/discharge cycles with no ill effects on the hybrid system.

Regular Maintenance â€" a Draw
Most hybrid cars do not require any additional regular maintenance on the hybrid-specific components. An exception is the air filter on the battery system of the Ford Escape Hybrid , which needs to be replaced every 40,000 miles.

The gasoline engine in a hybrid vehicle requires the same maintenance that it would if it were the only power source driving the vehicle. That means oil changes every 5,000-10,000 miles depending on the vehicle and the driving conditions.

In ordinary vehicles the brake pads need to be changed regularly. But the hybrids' regenerative braking systems and their reduced heat means their brake pads typically last much longer. "We've seen customers go 85,000 miles before they needed to replace their brakes on their Prius vehicles," says Toyota's Smith.

Fuel Economy â€" Hybrid's Strength
Until the EPA changed its methods for calculating fuel economy for 2008 model-year vehicles, there had been a large discrepancy between the EPA fuel economy ratings listed on the window sticker and the "real-world" results most drivers experience. While all vehicles are affected by this discrepancy, hybrid vehicles appear to be more affected by it because their EPA estimates start off higher. "For example," explains Robert Bienenfield, product planning manager at American Honda, "a vehicle that has a fuel economy rating of 20 mpg may only get 18 mpg, while a vehicle that is rated at 50 mpg may only get 45 mpg. This seems like a bigger issue for the more fuel-efficient vehicle, but in reality both vehicles are off by 10 percent."

The EPA's new methods have brought fuel economy ratings more closely in line with real-world driving. For example, the 2007 Toyota Camry Hybrid had EPA-estimated fuel economy of 40 city/38 highway. For 2008, those numbers were revised to 33 city/34 highway. But the new EPA's fuel economy ratings still can't show how widely numbers can vary based on an individual's typical driving route.

"Short trips are the harshest on fuel economy, so anyone who drives just a few miles in his typical trip will see lower mpg numbers than someone who drives, say, 15 miles to work," says Bienenfield. And no matter which car you buy, a "lead foot" will always cost more in gas than a light touch on the accelerator.

Nonetheless, driving a hybrid will always save money over its gas-fueled counterpart. The difference is more significant for some models than others, so look at the 2008 EPA ratings carefully when comparing.

Costs Vs. Benefits
On the surface, it appears that the added costs of purchasing a hybrid are offset by federal and state tax benefits, reduced fuel costs and (potentially) lower insurance rates. Thus far, maintenance and repair costs for hybrid cars seem to be a wash. Of course, much depends on the vehicle you choose, where you live, your insurer and your driving habits.

There are plenty of other reasons to buy a hybrid, including reduced emissions for the environment and a long list of perks, both financial and otherwise. But for the hybrid car owners we spoke with, any additional up-front costs were outweighed by their love for their cars. Linda Sutherland, of Hermosa Beach, California, says her Toyota Highlander Hybrid was the right choice for her family because it can carry plenty of passengers and cargo to their mountain cabin â€" without being a gas guzzler on her 150-mile daily commute.

Now that she's owned the vehicle for a couple of years, she expects hybrid vehicles are in her family for good. "When we get ready to buy our next vehicle, we'll look for a hybrid convertible. Hopefully one will be available by then," she says.

For more on what motivates everyday consumers to become hybrid car owners, see "Why We Buy Hybrids".

[Doctor_K]

Some day in the not-so-distant future, hybrids will have (hopefully) become so ubiquitous that gas-only cars will probably be as curious and passe as cars with manual window cranks and no air-conditioning are today.

Here's hoping, anyway.

[Jason]

Nice find BT.  I don't own one but know people that do, however, they haven't had any problems as of yet.  Probably due to the fact that they are all less than a year old.  But if the warranites are comprehensive enough and cover that much mileage then now may be a good time to jump on board if you can afford the extra coin.

I'll bet you, though, that when the warranty runs out you'll be SOL when it comes to fixing the thing yourself.  I had a hard time finding the damn oil filter on my '08 Vue.  I can only imagine what kind of electrical problems could arise with hybrid and electric vehicles.