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January 14, 2006
latimes.com
Prius Tax Break May Not Last Long

Toyota's hybrid may soon reach the limit on the number of vehicles covered by the program.

By David Colker, Times Staff Writer

If you want a tax break on a new hybrid car, you may have to act fast.

Tax credits for fuel-sipping gasoline-electric cars or sport utility vehicles could total as much as $3,400 — but the award program starts phasing out once an automaker sells 60,000 vehicles. That could quickly shut out many buyers of the market-leading Toyota Prius.

The federal government, which issued guidelines Friday for auto manufacturers that wish to have their vehicles certified for the program, is promoting the credits as a potential boon for the fledgling market for hybrids. Since the first ones went on sale in the U.S. in 1999, they have grown to just more than 1% of total vehicle sales.

American automakers, still trying to catch up to Toyota Motor Corp., may stand to gain the most from the program.

"It could drive more business to the domestics," said Chintan Talati, spokesman for automotive information service Edmunds.com, "because they will be able to offer the tax credit incentive for a longer time."

Treasury Secretary John W. Snow promoted the credits Friday at a Ford Motor Co. research center near Detroit.

"Development and use of hybrid vehicles is a key step toward reducing gasoline consumption," Snow said.

The tax benefit was mandated by the sweeping energy bill that was signed by President Bush in August and went into effect Jan. 1.

Toyota's Prius, the fastest-selling hybrid in the U.S., already is in short supply at dealers. The Japanese automaker, which also sells two hybrid SUVs, expects its hybrid sales to hit the 60,000 mark in the first half of this year.

And although that would mean fewer tax credit incentives to offer customers, Toyota spokesman Xavier Dominicis said, the company would consider it something of a badge of honor.

"It would validate the value of hybrid technology that we have been putting in our cars," he said.

All told, 212,000 hybrids were sold in the U.S. last year, accounting for 1.3% of cars and light trucks, according to J.D. Power & Associates. The gas-stingy vehicles have caught on, despite higher sticker prices than comparable models, but the Prius is the hottest hybrid.

Last year Toyota sold 146,560 hybrids, outselling rival Honda Motor Co., which offers Accord, Civic and Insight hybrids.

Ford also sells hybrid Escape and Mercury Mariner SUVs; the automaker estimated Friday that buyers could qualify for tax credits of as much as $2,600.

Hybrid sales could jump to 280,000 in 2006, said Anthony Pratt, a J.D. Power forecaster. But the tax credit will be only a minor reason for the sales jump.

"People still tend to determine what car to buy based on their monthly car payment," he said. "They would not see any of the tax credit until at least April 2007 when they file their return."

For automakers, the tax law has caused a few headaches.

Last year Honda sent letters to the Internal Revenue Service asking the agency to issue the tax credit determinations as soon as possible.

"This whole thing about the tax credit being 'up to' $3,400 is not very helpful for customers," Honda spokesman Marcos Frommer said. "We need to be able to give a list to our dealers, telling them just what they can say."
 

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"Tax credits for fuel-sipping gasoline-electric cars or sport utility vehicles could total as much as $3,400 — but the award program starts phasing out once an automaker sells 60,000 vehicles. That could quickly shut out many buyers of the market-leading Toyota Prius."

Well, The Prius sells by it self: The strength of the Prius is not just the gas mileage nor the Tax Credit. It is in the Prius HSD and its advanced technology laden concept.

America could have had this technology a long time a go if they did not alienate the Toyotas and other foreign manufacturers petition to and intention to participate for the "development research" on the now defunct, _Super_Car_Project_ that wasted our civil tax money in the tune of, Circa $ Billion Dollars. Back in the early 90's the US govrnmnt offered this huge amount of money to the BIG THREES, then to research & develop a Super Fuel Efficient Vehicle for America. To combat Americas dependency to the foreign Oil, mainly from Moddle-East. Toyota and , I believe, Honda petitioned to be included to participate to the Super car Project but they were denied. Therefore, Toyota and Honda felt the danger of losing the competitive edge to the Big Threes if the Super Car Project materialise. So then, Toyota and Honda went its own route pouring billions of its own reaserch and develop money to craete the THS & HCH principled vehicle now in the market-place. A very future visioned and wise & analitical-Management effort to win the end game ! GM,Ford,and Chrysler should have let Toyota and others to participate and USA should have managed to grant and form an International Super-Car-Project consortium which would have benefited the domestic Auto manufacturers as well.
 

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hyperion said:
Com on Rick. Where was Toyota and Honda getting the cash to fund their R&D depts. (ans; they were selling their cars along with every other manufacturer in the world in the U.S.A.)
Hyperion, Your statement above does not co-relate to my view above ?
I thought your response to this matter were more profound and meaningful as you always post your intelligent perspective ! Are you tired today ? may be bed-ridden with the Flu or something ? Your comment just does not _Add_ Up.... ? But no big deal really...
 

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Tax Credit

Hello,
While the break for Prius and other fuel efficient cars does have a limit on the number that will qualify--THE BREAK FOR 6000#+ hogs is still $3500 tax credit and unlimited numbers (I think). This is one reason that these behemoths are everywher here in So. Cal.
The politicians need the limo tax break.
Carl
 
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