Hybrid Cars May Be Industry's Next High Profit Center

Is it possible that the auto industry has found it's latest Holy Grail?

For a long time, the industry had relied on its pickup trucks and sports-utility vehicles (SUVs) as their largest profit centers. Indeed, they looked at these vehicles as the geese that laid the golden eggs. That changed with the sharp spike in gas prices a couple of years ago. With gasoline now settling back to the $2.50-$2.75 range the margin on pickups and SUVs is razor thin, if theres any at all.

However, if you look at the hybrid segment, theres an interesting phenomenon going on. The 10 least expensive hybrids are priced between $19,800 and $28,100. And the prices seem to be holding at or near dealer invoice, which means that dealers are making a profit on these vehicles that, while it may not approach the same levels as their former star profit-makers, they are still doing all right.

AOL's list looked like this (from least to most expensive):

1.    Honda's reborn Insight. The Insight was the first hybrid to market, beating Toyota by a full year, and became a cult car when it didn't achieve the mass it needed to be considered a mass-market car. The Insight is priced at $19,800.

2.   Toyota's Prius Hybrid. Available since 2001, this has been the vehicle to beat in the hybrid market. It achieved the critical mass needed to become a market mainstay and offers a wide variety of features, including 40-plus mpg on the highway. The Prius starts at $21,000.

3.   Honda's Civic Hybrid. The Insight was produced until 2006, although it was very limited in its last year on the market. The Civic Hybrid, which came to market in the 2003 sales, powered by a 1.3-liter four, is available only as a sedan and is starts at $23,800.

4.   Chevrolet's Malibu Hybrid is next. It is also a mid-sized, rather than a compact as are the first three on this list. Still, it achieves respectable mileage of 34 on the highway and 26 in the city. It is powered by a 2.4-liter Ecotec four and cranks out 164-horsepower. It is priced at $25,592.

5.   Toyota offers the next hybrid with a Camry Hybrid. Priced starting at $26,150, this front-drive mid-sized sedan seats five and offers mileage of 34 and 33, highway/city.

6.   Saturn, although no longer part of General Motors' active stable, has an entry with its Aura Hybrid. It is essentially the same car as the Malibu Hybrid mid-sized and achieves mileage of 36 and 24, highway/city. It is priced starting at $26,325.

7.    Nissan's Altima Hybrid is next. Another mid-sized sedan, it seats five and powered by an electric motor that is charged by a 158-horsepower, 2.5-liter four. The interesting ratings for this vehicle are its highway/city rating. The Altima Hybrid achieves 33 mpg on the highway (probably the most realistic estimate so far in this bunch) and 35 around town. This is the type of mileage skew you would expect in a hybrid. The reason is that in the city the vehicle can take advantage of the natural charge offered by first and second gearing as well as the charging of the regenerative braking system that does put a lot of energy into the battery system. The Altima Hybrid starts at $26,780.

8.   The Ford Fusion Hybrid is next on the list. The 2010 Fusion was radically restyled for the 2010 model year, roughly three years into its product cycle which makes this an even more interesting offering because automakers usually wait until the fifth or six year of their product cycle to change a model radically, but Ford chose to do it halfway into the Fusions product cycle for 2010 and the result is not only a Car of the Year, but also an exciting product. The Fusion Hybrid if a sedan that seats five and uses a 2.5-liter four to power its electrical system. Ford is another of the automakers that uses honest figures in its mileage, showing its highway mileage to be 36 mpg and its city cycle to be 41 mpg. This is a far more honest way of listing things. This model starts at $27,625.

Follow Us

Comments (8)
  1. In my opinion, hybrids are a dead end. They are too complicated, as one of the first owners of a Prius I find that Toyota dealers do not know how to fix them, service is very expensive, and they still keep us dependent on foreign oil. Electric cars are the future and soon.

  2. I completely agree with Desertstraw. Point your interest to all-electrics and wait for them to gain in range capabilities. That's what I'm doing.

  3. i agree with Marc Stern that hybrids will be a strong niche for auto manufacturers for a good long time. IMHO, BEVs will no catch on with the mass market until range increases substantially and/or charging time decreases substantially, or both. Until them, the hybrid will be a strong player.

  4. Noel Park, read the specs for the BYD E6, range of over 200 miles and 80% charge in 15 minutes. Before you dismiss them, they are the largest manufacturer of cell phone batteries in the world, Warren Buffett bought a 10% stake in them for about a quarter of a billion dollars and Barclay's bought a 5% stake recently.

  5. Hybrids may have the problems of ICE & the battery system ..dual mode operations ...I rather buy a regular ICE with good mileage ..Now if the EV can cost around $ 20k I wud go for that ..100 miles range for Leaf is ideal charge it overnight at home with 220 v...EV far less parts & easier to maintain ..

  6. #4 Desertstraw: If and when it happens, it will be a big step forward. I'll believe it's available in the U.S. when I see it. If and when it happens, it will be another very large nail in the coffin of the U.S. auto industry, IMHO. I'm not going to buy a Chinese car in my lifetime, but plenty of people will.

  7. Over Thanksgiving, I started talking with a family member who is a builder. He's not too far away from the stereotype -- he hunts, drives big pickup trucks, attends church, etc. Anyway, I asked his opinion about green building, and he said that he'd been taking a number of classes on the topic, and knew more than I did about the subject (on account of having actual experience with the trade -- I merely absorb information).
    His basic attitude was that building green allowed him to charge more for a house, and he liked that (since it means bigger profits for him). In that vein, though, it allows the customer to front-load their costs and be insulated (pun intended) from swings in energy prices. It's a win for everyone including the planet and the bank -- but it does re-enforce the notion that it's expensive to be poor.
    It sounds like the car industry is having the same realization!

  8. I agree with desert. I think the real future is a hydrogen electric mix.

Commenting is closed for old articles.

Get FREE Dealer Quotes

From dealers near you

Find Green Cars


© 2015 Green Car Reports. All Rights Reserved. Green Car Reports is published by High Gear Media. Send us feedback. Stock photography by izmo, Inc.