Cheaper Hybrid Automobiles Needed Next

How a failing economy could hurt hybrid car sales

Aura Hybrid Is Cheaper Than MostOn December 2, 2008, the United States learned that it had been in a recession for over a year. While the news wasn’t exactly a shock to many who have watched stocks tumble, 401(k)s shrink and housing sales slump, the new label does have an impact on the buying habits of Americans. One of the potential victims of this recession will most likely be car sales, especially hybrid car sales.

Over the summer, when gas prices were reaching ever higher, toward $5 a gallon, the premium consumers paid for a hybrid vehicle could easily be offset with fuel savings. Now, as gas prices have tumbled nearer to $2 and as low as $1.35 in some areas, that premium seems less and less worth it for potential new car buyers. Yes, vehicle owners have a short term memory when it comes to fuel costs and which cars get the best miles per gallon.

This article from Cars.com is about how people in the market for a new car just don’t have an extra couple of thousand to spend on a hybrid when the rate of return on that premium is much slower than it has been in the recent past.

With several new hybrids scheduled to hit showroom floors in the next year and the looming auto industry crisis, is it possible that automakers will cut costs and therefore the price of hybrid cars to be more competitive with standard fuel vehicles? If not, there may be a glut of hybrids that no one is buying, which would be unfortunate as that is a big part of the plan that Detroit is pitching to Congress this week in hopes of getting billions in bailout funds.

Sales of the ever-popular Toyota Prius were down 48% in November 2008, compared with a much smaller drop for Honda’s sub-compact, the Fit, a model that saw only a 8.4% drop in sales. If these numbers hold true for many other hybrid cars, which looks to be the case, Detroit’s plan of saving themselves and lasting another year by going green could be all for not.

So the question becomes, would you prefer to buy an economical, standard fuel vehicle that gets above average gas mileage or would you rather pay more for a hybrid that will net you a better ROI after a few years? Remember that short term memory problem? My guess is we will need cheaper hybrid automobiles in 2009 and 2010, or the downward trend will continue. Will the 2009 Honda Insight get here fast enough?

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