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Tax Credit for Hybrids Running Out, but Sales Hardly Affected

July 03, 2008

The three most popular hybrids sold in America either no longer qualify for the U.S. government tax breaks for hybrids or those tax breaks are about to decline sharply, the Chicago Tribune reports.

On July 1, the tax credit on the Honda Civic hybrid was cut in half, to $525. It will disappear at the end of the year. The credit on the Toyota Prius, once $3,150, and for the Toyota Camry hybrid, vanished in the fall.

The tax break for hybrids begins to phase out after a manufacturer sells 60,000 qualifying vehicles. Because of heavy demand for the Prius, Toyota reached that benchmark early in the program.

Honda also hit the limit last year, and the tax credit on the Civic hybrid began phasing out Jan. 1. The diminished tax breaks don't seem to be hurting sales of the Prius or the Civic.

 

Marc Canon, a spokesman for AutoNation Inc., said only about one in four AutoNation customers even knows about the tax incentive. Customers continue to buy the vehicles for their fuel economy.

But without tax breaks, it takes longer for fuel savings to make up for the cost of a hybrid's complex gasoline-electric powertrain, according to the Chicago Tribune.

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