Over the last 20 years, GM's loss has been Toyota's gain, but that may change. While Toyota trailblazed the market for hybrid gas-electric cars first with its Prius then with the Highlander SUV, and two Lexus luxury models, it is about to lose one of its key advantages that could help GM take market share for environmentally-friendly cars.
While some Toyota hybrids will maintain a small fuel-economy lead over GM's upcoming line-up of Saturn Green-line models, GM will have a big cost advantage over Toyota. Because Toyota has sold more than 60,000 hybrid vehicles, the IRS has begun to phase-out tax credits for the vehicles. As of Oct. 1, tax credits were cut in half for Toyota hybrids, and will continue to decline over the next five years. The tax credits remain for hybrids made by other automakers like Ford Motor Co.'s Escape SUV, Honda's Accord and Civic sedans and GM's forthcoming Saturn VUE Green-line SUV and Aura Green-line sedan.
Potentially helping sales, GM's Saturn models are expected to sport a lower sticker premium than Ford, Honda and Toyota hybrids. Instead of carrying a sticker premium of a few thousand dollars, the Saturns are expected to only charge about $1000 more than similarly equipped models. The reason for the lighter up-front costs is because GM's hybrids sport less batteries meaning that the car can not run on the electric motor alone like most rival models. Nonetheless, GM promises 20% better fuel economy than the 4-cylinder equipped VUE and 15% better fuel economy than the V6 equipped Aura. GM is expected to start selling the VUE hybrid later this year, and the Aura will begin production for a Spring 2007 launch. If the Aura hybrid is a success, then GM is expected to give the Aura's sibling, the Chevy Malibu, the same option.
The combination of the lower price and the bigger tax rebate could help GM steal the limelight from Toyota giving it a much needed boost as the company continues its efforts to restructure. —Matthew Wurtzel
See story about Aura from The Kansas City Star
See story about hybrid tax rebate from Bankrate.com
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