Hybrid Car Review

Toyota set high sales goal for their hybrid cars this year. They are hoping to sell 430,000 hybrids worldwide, with 260,000 being sold in the US alone. The Prius is the top selling hybrid car in the US (and Toyota's third best-selling car in the U.S., behind the Camry and Corolla), but Toyota has set an even higher sales goal of 160,000 sold in 2007, up from 106,971 units sold in 2006.

But Toyota is setting these goals at a time when their sales are seen to be softening. When the federal tax credit was cut in half in the last quarter of 2006, Toyota complained that sales had slowed. After the first quarter of 2007, those federal tax credits will be cut in half again and they are set to expire for Toyota in the last quarter of 2007. This despite Toyota's campaigning to extend those tax credits.

The base price on a Toyota Prius is $22,175, but the average cost to buy last month was $25,340. That is down from a high of $26,473 from October (which just happens to be the month the federal tax credit expired).

Days to turn* a Prius was 7 days in October. Last month it was 24 days. There is one caveat to this increase in days to sell. Toyota was able to increase production of the Prius by moving production of the Camry Hybrid to the US. And so, in these past few months, Toyota has been able to increase inventory, meaning consumers aren't being forced to pre-order their Prius, anymore.

I theorized that Toyota would need to do something to compensate to compete with other hybrid carmakers who won't be losing those tax credits, and it seems they have.

Starting last month, Toyota started offering an interest-free three year loan or a lease starting at just $219 a month. And these incentives are not currently scheduled to end.

Source: Bloomberg.com: News

* Days to turn is an industry term indicating how long a car stays on the lot before being sold. At 24 days, the Prius is still well below the industry average.