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Hybrid-vehicle Owners’ Mounting Dilemma

by: Mark Clarkson
As the price of gasoline drops, the sales of gas-electric hybrid vehicles plunge as well. Also, the federal tax credits given to several hybrid vehicles are now minimized for some auto brands. This is the mounting dilemma of hybrid-vehicles owners.

On the bright side of the issue on hybrid-vehicles, the best-selling hybrids – Toyota Prius and Honda Civic Hybrid – have been barely pushed by the deflation of gasoline prices. The mentioned best-selling hybrids recorded a total of 26,249 sales in August. Said month is when the average price of gasoline nationwide hit $3 per gallon. Since August, gasoline prices dropped by 24 percent to $2.28 per gallon unfortunately, hybrids sales also fell by 31 percent to 18,117 last month. This information was earlier divulged by Edmunds.com. By contrast, the total passenger vehicles sales in the United States also fell by 19.5 percent during said period.

Hybrid-vehicles account for about 1.52 percent of all vehicles sold last month. That figure, as further noted by Edmunds, is behind by 1.77 percent in August and up by 1.38 percent in November last year. The most striking drop occurred between September and October when the tax credit on both Toyota and Lexus reduced by 50 percent. Toyota and Lexus brands, which are owned by Toyota Motor Co., account for more than 75 percent of all hybrid sales. In this regard, Jim Press, president of Toyota North America, urged the Congress to extend the federal tax credit for hybrid vehicles to encourage consumers to buy more fuel-efficient cars.

It can be recalled that in the previous years, hybrid purchasers enjoy the privilege of having tax deductions by buying particular models. This year delivered a more rewarding tax credit. Moreover, taxpayers who are subject to the alternative minimum tax can avail the hybrid credit.

Unfortunately, on the second quarter, the credit begins to vanish. For instance, a purchaser of Toyota or Lexus hybrid in the fourth quarter of 2006 or the first quarter of 2007 can only avail only 50 percent of the original tax credit. In the subsequent quarters, the credit will fall to 25 percent of the original amount. After that, no credit is to be given.

So far, the biggest hybrid tax credit given amounts to $3,150 for the top-selling Toyota Prius. The latter is equipped with cutting-edge parts for Toyota Prius, which made it one of the most captivating hybrid vehicles in the present time. The tax credit of said hybrid was reduced to $1,575 on Oct 1. However, compared to other hybrid models’ tax credit, said amount is still bigger.

“Toyota cleared out its pipeline to get interested buyers a Prius before the September deadline, said Martha Voss Toyota spokeswoman. She added that before the November election there was talk of some people on the House and Senate side wanting to introduce bills to lengthen the hybrid tax credit.

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