Time is running out and hybrid car buyers only have until the end of the year to get their tax credit for buying a Honda Civic hybrid, one of the more popular fuel saving vehicles on the market. The expiring tax credit is the latest in a series of changes chipping away at the financial incentives to buy a hybrid. Tax breaks tied to Toyota's popular Prius, which gets over 45 mpgn, and its other hybrid models ended about a year ago. Now the federal government is phasing out the similar incentives on the Honda Civic hybrid, which gets 42 mpg.
Combine that with the fact that fuel prices have fallen from their historic highs above $4 a gallon this summer, and it's getting a lot more expensive to be an environmentally conscious driver. Hybrid tax incentives start to go away when a car maker sells its 60,000th vehicle, a level Toyota reached mid 2006 and Honda hit in third quarter 2007. The amount of the tax credit is first reduced by 50% before disappearing altogether over several months. Honda's tax credit, currently $525, will be phased out by yearend, according to the IRS. The Civic credit had been as high as $2,100 before the phaseout began in January.
Sales of hybrids, though still only about 2% of the overall market, have grown rapidly since the Prius made its debut in the US in 2000. Toyota and Honda were the first to have these vehicles in dealer showrooms when fuel prices started skyrocketing in the past few years.
Hybrids get better mileage because they pair a traditional internal combustion engine with an electric motor, which is powered by a rechargeable battery. Electric motors boost power to the regular gas engine, allowing automakers to install smaller, more efficient motors in hybrid cars. Some hybrids run on electric power alone at low speeds, further saving fuel.
Higher sticker prices and lower fuel costs make hybrids less economical than their gas counterparts because it takes far longer to earn back the hybrid's price premium through savings at the pump. Hybrids can cost anywhere from $2,000 to $7,000 more than conventionally powered cars. The Honda Civic hybrid retails for $21,954, compared with $17,820 for a conventional Civic, according to Edmunds.com, an autoresearch firm.
A Honda spokesman says the automaker has no plans to discount its Civic hybrid in light of the disappearing credit. Next year, Honda is releasing a new Insight model, expected to be priced around $19,000, much cheaper than most other hybrids, though it will not be eligible for a tax credit. In any event, many customers have grown accustomed to hybrids' prices and buy them to brandish their environmental credentials, not save money. So dealers and analysts don't expect Toyota and Honda hybrids to suffer.
Tuesday, November 11, 2008
Wednesday, November 5, 2008
Things to Consider Before Buying a Hybrid Car
Even though gas prices have been retreating to more reasonable levels, many families are still interested in hybid cars. The country is still in a financial crisis and global warming remains a long term issue. Most experts also agree that once the gloobal economy recovers oil and gas prices will increase again. Luckily, drivers have more options than ever before when it comes to saving money and reducing their carbon footprint.
10 years ago Toyota came out with the Prius, the world's first mass produced hybrid car which utilized both gas and electric engines. Now nearly every carmaker is attempting to produce its own version of the hybrid and consumers are chomping at the bit. The sales of "green" vehicles rose 38% last year alone according to AP.
If you are thinking of a hybrid here are some issues to consider:
Is a hybrid car really economically efficient?
Make sure you do your research on the true market value so that you are able to negotiate effectively. Keep in mind that hybrid prices vary greatly depending on the demand in the region. Hybrids can also be priced more highly in metro areas or after a new model first comes out. You should also note that most of your savings with a hybrid actually come over the longterm and that they are typically more expensive to buy or lease than other cars.
What type of hybrid do I want?
The Toyota Prius is a gas-electric hybrid, the electric motor is used for short distances and the gasoline engine kicks in at higher speeds to power the wheels and recharge the battery. The Chevy Volt, one of the upcoming series of plug-in hybrids, will travel 40 miles on the battery when the gas engine recharges it. Plug-ins will be recharged through an electrical outlet in the wall. The new bailout bill also provides new tax credits for plug-in hybrids, up to $7,500 depending on the kilowatt capacity of the battery.
How much will I save on gas by driving a hybrid?
With hybrids costing between $1,200 and $8,000 more than traditional cars, it can take at least 100,000 miles to offset the increased cost of the car. Two other factors to consider are the distance of your commute and the price of gas in your area. Obviously, the more you drive the more quickly you'll earn back the added cost of the car. Be aware that there are other fule efficient cars on the market. But if you are interested in a hybrid you have a variety of choices.
How important is the environmental impact of the car?
Not all hybrids are created equally. The Automaker rankings of 2007 listed Honda as the Greenest Automaker. If you are concerned about your car's impact on the environment, visit www.fueleconomy.gov and you can check out the listings for every year of a car, make and model and learn about the car's carbon footprint, EPA air pollution score and petroleum consumption.
10 years ago Toyota came out with the Prius, the world's first mass produced hybrid car which utilized both gas and electric engines. Now nearly every carmaker is attempting to produce its own version of the hybrid and consumers are chomping at the bit. The sales of "green" vehicles rose 38% last year alone according to AP.
If you are thinking of a hybrid here are some issues to consider:
Is a hybrid car really economically efficient?
Make sure you do your research on the true market value so that you are able to negotiate effectively. Keep in mind that hybrid prices vary greatly depending on the demand in the region. Hybrids can also be priced more highly in metro areas or after a new model first comes out. You should also note that most of your savings with a hybrid actually come over the longterm and that they are typically more expensive to buy or lease than other cars.
What type of hybrid do I want?
The Toyota Prius is a gas-electric hybrid, the electric motor is used for short distances and the gasoline engine kicks in at higher speeds to power the wheels and recharge the battery. The Chevy Volt, one of the upcoming series of plug-in hybrids, will travel 40 miles on the battery when the gas engine recharges it. Plug-ins will be recharged through an electrical outlet in the wall. The new bailout bill also provides new tax credits for plug-in hybrids, up to $7,500 depending on the kilowatt capacity of the battery.
How much will I save on gas by driving a hybrid?
With hybrids costing between $1,200 and $8,000 more than traditional cars, it can take at least 100,000 miles to offset the increased cost of the car. Two other factors to consider are the distance of your commute and the price of gas in your area. Obviously, the more you drive the more quickly you'll earn back the added cost of the car. Be aware that there are other fule efficient cars on the market. But if you are interested in a hybrid you have a variety of choices.
How important is the environmental impact of the car?
Not all hybrids are created equally. The Automaker rankings of 2007 listed Honda as the Greenest Automaker. If you are concerned about your car's impact on the environment, visit www.fueleconomy.gov and you can check out the listings for every year of a car, make and model and learn about the car's carbon footprint, EPA air pollution score and petroleum consumption.
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