November 4, 2009

How The Economy Is Hurting The Sales Of Hybrids

Despite the fact that hybrid vehicles promise to decrease gas costs – and their drivers’ carbon footprint – their initial, higher price tag, among other things, is making them a hard sale. In 2008, the sales of hybrid cars dropped 10 percent. Of course, with car sales in general falling in a slump, the economy is one of the first things to blame.

Hybrid vehicles aren’t inexpensive. The two most popular hybrid cars, the Toyota Prius and the Honda Insight, don’t come with small price tags. The 2010 Prius comes with a manufacturer’s suggested retail price of $22,400 to $27,670, depending on the model. The 2010 Insight comes with a price tag of $19,800. In today’s economy, consumers aren’t as likely to spend as much money – even for hybrid vehicles. With jobs being unstable and life costs on the rise, it’s difficult for people worried about these factors to justify buying a pricey car.

These consumers might be a bit shortsighted. Hybrid cars may cost more upfront, but they can bring significant savings to their wallet over the long haul. These cars get incredible gas mileage, meaning that their drivers will be spending less money at the pump. Hybrids are also famous for their reliability – drivers will also spend fewer dollars on maintenance and upkeep. But even more significantly, drivers may spend less on auto insurance if they own a hybrid vehicle. In 2005, the Farmers Insurance Group of Companies became the first auto insurer to offer consumers a discount for driving hybrid vehicles. The company reduced auto insurance rates by 5 percent for those drivers who owned hybrid cars. Early the following year, Travelers Insurance Company also reduced auto insurance rates for hybrid owners, dropping them by 10 percent. Today, most auto insurers offer their own discounts on policies taken out by hybrid owners. It’s a great way for the owners of these fuel-efficient cars to save a significant amount of money.

While the economy may have slowed the number of sales of hybrid vehicles there are several reasons to believe that this is only a temporary decline. For one, hybrid cars are kinder to the environment, and a growing number of consumers are interested in practicing green’ living. A hybrid vehicle, which consumes less gas, helps them achieve this goal. Secondly, hybrid owners in general report that their vehicles drive well and require little maintenance. This combination will ensure that more drivers in the future will turn to hybrid cars. Finally, the government is pushing automakers to increase their production of fuel-efficient cars. Automakers will be certain, then, to continue promoting hybrids heavily.

It’s safe to say that once the economy is back on its feet, hybrid sales will be as well.