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Hybrid autos - Do not price like this
By Mike Ma
I am on vacation in California, where we have been driving between San Francisco, Tahoe, and the Wine Country--a lot of miles, and Hertz was kind enough to give me a gas guzzling Buick. With all the brouhaha about hybrids(being the car, not the wholesaler). I went "Windows shopping" on CarsDirect, and here is what I found.
Does something seem wrong to you here? Isn't one of ideas behind hybrids (not the only of course) is to SAVE you money. But here is the truth:
1. The tax benefit is not as good as you may think, especially those susceptible to AMT. I am going to go out on a limb and say that the marketing demographic for hybrids is likely to have AMT liability.
2. Manufacturers are lying. For instance, this MSN Money article points out that the Chevy Silverado Hybrid and the GMC Sierra each get only ONE mile per gallon more efficiency than their gas counterparts. And even the good eggs such as the Prius really get nowhere near the touted 60mpg.
So we are left with the gas savings to help us justify a $14,528 premium. A quick calculation at MixedPower shows us this (I used 30mpg as the average EPA on the conventional Accord, from its own stats):
It would take about 116+ years at $3/gallon and 12,000 miles/year?!?!? You may disagree with the exact assumptions, but almost anyway you slice it, it doesn't save you money to get a hybrid.
Why do the auto makers do it ... because for the time being they can (for now). They are pricing their products at antithetical ends of their intent. It also implies that they don't really care about the environment or rising fuel costs, they care about capitalizing short-term profits. But someone will figure out that this is a pennywise, poundfoolish strategy and create an economical, available, atuentic hybrid that will speak to car buyers everywhere.
Do a hyopthetical, mental "find and replace" ... automaker--> fund company, car --> mutual fund, car buyer --> shareholder, etc. and see what implications there are for your own product development and fee structures.