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Auto Warranty: Buzz for Hybrids Unwarranted?

hybrids2No matter what auto warranty covers your hybrid, the concept itself is not turning out to be the big money maker that foreign and domestic brands had imagined. Since there is no auto warranty that covers resale or secures a good return on the premium consumers pay for hybrids, you might want to re-think a hybrid purchase.

“A few years ago, automakers decided to put hybrid technology in regular models. The hope was to move beyond the geek chic of the Prius and win over everyone else. Hybrid would be another option, like , say, navigation. If enough people bought hybrids, carmakers figured, they would achieve sufficient economies of scale to eliminate the big premium over conventional models.

That hasn’t happened. And some models have suffered badly. Honda Motor Co. (NYSE:HMC – News) sold 70% fewer hybrid Accords in 2006; Toyota has sold 24% fewer Lexus RX 400h sport-utility vehicles so far this year. The fuel savings are simply too puny to offset the hybrid premium. With gas at $2.50 a gallon, it would take 10 years to recoup the extra $3,000 cost of the Accord hybrid.
[..]
Getting prices down–and not by discounting–is the long-term solution. That means finding a way to make the cars more cheaply. Batteries account for about half the hybrid premium. But cheaper lithium ion cells won’t appear for several years. Cutting costs further requires achieving those elusive economies of scale, which means building and selling more hybrids. That’s Toyota’s strategy; it hopes to sell 160,000 Priuses this year, up from 107,000 in 2006.”
(Source)

Posted on Tuesday, March 13th, 2007 at 5:00 am In Auto Warranty  

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