What
happens when the Prius loses it's tax deduction?
How will
capped hybrid tax deductions affect hybrid sales?
Since the new Clean
Vehicle Tax Credit was approved last year, I've
complained that the credit was biased against Toyota. By
capping the tax credits by manufacturer at just 60,000
hybrids, it's obvious that Toyota will quickly run out of
deductions because of demand for the Toyota
Prius.
In recent days Secretary Snow has essentially admitted
that the credits were partially written to help out domestic
automakers, and maybe - in hindsight - that wasn't such a
bad idea.
Thus, the story of 2006, when it comes to hybrid
cars, will continue to be the Toyota Prius hybrid.
Because not every Toyota hybrid sold is going to qualify for
a tax deduction, will this have an affect on the Prius and
Toyota hybrid sales?
Will this simply even the playing field between Toyota and
other automakers for the hybrid market? Will Toyota counter
with some kind of discount? Will sales on the Honda
Civic hybrid and Ford
Escape hybrid explode? Will hybrid sales, overall,
decline?
While the Clean Vehicle Tax Credit might offer a deduction
of $3400.00 to buyers, how much will that affect most
people's taxes? Sure, the tax credit could be worth several
hundred dollars for the average buyer, but is that really
the clinching factor for most Prius buyers?
I guess we'll see.
Of course, if gasoline prices continue to rise, the lack of
tax credits for the Prius might not even matter. I think
next year the U.S. will see sustained gasoline prices near
$3.00, minimally. In California, $4.00 per gallon gasoline
is going to be fairly common, and it won't just be a spike,
such as after Katrina.
Speaking of hurricanes, if another Katrina hits next year,
the predictions above will be blown away.
Anyway, that's hybrid story for 2006.
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