Hybrid Cars May Be Industry's Next High Profit Center

By Marc Stern

Marc Stern

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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... Read More

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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.