Sales of gas-electric hybrid vehicles have fallen sharply since August, a result of declining gasoline prices and shrinking federal tax credits for some brands.
Despite the sales drop, prices for the two best-selling hybrids — the Toyota Prius and Honda Civic Hybrid — have barely budged. But that could change if inventories continue to climb.
Carmakers sold 26,249 hybrids in August, the same month the average price of gasoline nationwide hit $3 per gallon.
Since then, gasoline prices have fallen 24 percent, to $2.28 per gallon, and hybrids sales have dropped 31 percent to 18,117 in November, according to Edmunds.com.
By contrast, total U.S. passenger-vehicle sales fell 19.5 percent during the same period.
Hybrids accounted for only 1.52 percent of all vehicles sold in November. That's down from 1.77 percent in August, but up from 1.38 percent in November 2005, according to Edmunds.
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The sharpest drop came between September and October, when the tax credit on Toyota and Lexus models fell by half. These two brands, both made by Toyota, account for more than three-fourths of all hybrid sales.
In a speech at an industry conference last week, Jim Press, president of Toyota North America, urged Congress to extend the federal tax credit for hybrid vehicles to encourage consumers to buy more fuel-efficient cars.
In years past, buyers got a tax deduction when they bought certain hybrid models. But starting this year, they could get a more valuable tax credit. Taxpayers subject to the alternative minimum tax can't take the hybrid credit.
The credit starts to phase out in the second calendar quarter after each manufacturer's hybrid-vehicle sales (measured from Jan. 1 of this year) reaches 60,000.
Toyota passed that milestone in the second quarter. As a result, anyone who buys a Toyota or Lexus hybrid in the fourth quarter of this year or the first quarter of 2007 will get only half the original credit. In the following two quarters, the credit falls to 25 percent of the original amount. After that, no credit is allowed.
The largest hybrid credit — $3,150 for the top-selling Toyota Prius — shrank to $1,575 on Oct 1. That's still bigger than the full credit on some hybrid models.
Toyota cleared out its pipeline to get interested buyers a Prius before the September deadline, Toyota spokeswoman Martha Voss says. That might have stolen some sales from later months.
Honda, the next-biggest maker of hybrids, is not likely to reach the 60,000 milestone until the third or fourth quarter of next year, says Alex Rosten an industry analyst with Edmunds.com.
Before the November election, "There was talk of some people on the House and Senate side wanting to introduce bills" to extend the hybrid tax credit, Voss says.
That effort could get a boost when Rep. John Dingell, a Democrat from Michigan, takes over as chairman of the House Energy and Commerce Committee. But it's not likely to happen soon.
Days to turn, which tells you how long on average cars sold in a given month sat on the lot, jumped to 11 in November from six in August for the Prius, according to Power Informational Network. That's still very low by industry standards.
Rising inventories have not created bargains for hybrids.
Prius
Month Average Price*
August $26,076
November $26,281
Civic Hybrid
Month Average Price*
August $23,701
November $23,525
* Average price less any cash rebates
Source: Power Information Network via The Associated Press