Honda is Next ~ Hybrid Car Review
Hybrid Car Review: Honda is Next

Tuesday, May 08, 2007

Honda is Next

The IRS certified GM and Nissan have not hit the 60,000 unit limit on sales for the tax credit phase out period to begin today.

Toyota is almost at the end of their phase out, and Honda will most likely hit their limit in August or September this year, triggering their phase out.

The federal tax credit has a complicated system in place to limit the number of consumers who can claim the credit. Those who buy qualifying vehicles may claim the full tax credit (the amount varies by model) up to the end of the first quarter after the quarter in which the manufacturer records the sale of its 60,000th qualified vehicle. For the second and third quarters after the quarter in which the limit is reached, the credit is cut in half. Two quarters after that, the credit is cut in half again (so it is one quarter of the full credit amount). After two more quarters pass, the credit is phased out completely.

The phase out period was intended as a domestic incentive policy, since it was known right from the beginning that domestic automakers would be likely to hit the limit later than Toyota or Honda.

Toyota triggered the phase out period back in June, 2006. Which means anyone buying a Toyota or Lexus hybrid today may only claim one fourth of the full tax credit, and that's only if they qualify. If you buy from Toyota after September 30, 2007, you will not be able to claim any credit.

Nissan, Ford and GM
According to the IRS, GM sold 2,927 qualifying vehicles in the first quarter bringing their total up to 8,485 units. Nissan sold 2,094 units in the first quarter. Ford, according to my spreadsheet, has sold just over 30,000 units since January of 2006. So, none of the three automakers are likely to hit the 60,000 unit limit any time soon.

Honda Will Soon Hit the Federal Tax Credit Limit
Honda has sold over 48,000 units since January of 2006. At their current rate of sales, they will hit the 60,000 limit in another 4 months or so. If they do so, the IRS will trigger their phase out in October of 2007. And, if I'm keeping this all straight, that means their credits will be cut in half in January, 2008.

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