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The Honolulu Advertiser

Posted on: Monday, June 7, 2004

Gasoline prices boost sales of hybrid cars

 •  Gas guzzlers still prevail
 •  World's airlines may lose $3 billion on higher oil prices
 •  Inflation anxieties rise with oil price
 •  Chart: Will a hybrid car save you money?

By Sean Hao
Advertiser Staff Writer

Unlike many local drivers, Jim Williams of Nu'uanu finds the recent rise in gasoline prices amusing.

Jim Andrews fills his Lincoln with $59.55 of premium gas at the Kahala Shell station. He needs a big vehicle, he says, because he's a big guy.

Bruce Asato • The Honolulu Advertiser

Williams and his wife, Lauree, own a hybrid gas-electric car. The couple have put about 1,000 miles on their pearl blue 2004 Toyota Prius since purchasing it in April and have filled its 12-gallon tank just three times, Williams said.

"Even when we fill up, it's under $20," said the music sales representative. "It's kind of a running gag when we drive past a gas station. As we drive by and see the $2.20 price for gasoline, it really drives home what a good deal it was."

Once a novelty, hybrid vehicles are moving into the mainstream, thanks to increasing availability, improved performance and gasoline mileage that ranges from 40 to 60 miles to the gallon. Rising gasoline prices — averaging $2.24 on O'ahu Friday — are only helping that trend.

Sales are brisk, reports Servco Automotive, which runs the Toyota dealerships in Hawai'i. It has sold 160 Priuses since a redesigned 2004 model hit showrooms in October.

Servco has another 200 people on a waiting list for the car, which starts at $20,810, with delivery time of three to six months, said Lance Ichimura, director for marketing.

New models heading for showrooms

2004

  • Chevrolet Silverado Hybrid
  • Dodge Ram Contractor's Special
  • Ford Escape Hybrid
  • GMC Sierra Hybrid
  • Lexus RX400h
  • Toyota Highlander Hybrid

2005

  • Acura RL Hybrid
  • Honda Odyssey Hybrid
  • Honda Pilot Hybrid
  • Nissan Altima Hybrid
Nationwide, sales of hybrids are expected to more than double this year to more than 100,000 vehicles and reach 440,000 vehicles by 2008, according to J.D. Power and Associates.

That's still a tiny fraction of the 16 million new vehicles sold in the United States annually. Hawai'i dealers say, although hybrids are gaining, there's little sign of a slowdown in sales of gas-thirsty autos such as sport utility vehicles and trucks.

Matt Smith, a real estate agent in Kailua, bought a white Ford Expedition about a month ago. High gas prices "were a factor, but safety was a larger consideration — just having a bigger, safer vehicle for the children," said Smith, whose Expedition's mileage is rated at 15 to 19 miles to the gallon. And, "with two boys, we've always got another two boys or three in terms of friends, and they all fit, and their gear," Smith said.

Mike McKenna, owner of McKenna Motors Windward Ford and Volkswagen/Mazda dealers, said auto shoppers are paying more attention to fuel efficiency, but "the guys who buy the big SUVs, they don't care" about high gas prices.

"With the price of fuel going up, we've seen a bit of a surge in smaller cars. Not a great deal, but there is some."

Three of the top-five selling autos in Hawai'i through March of this year were trucks: Toyota Tacoma, Ford F-Series and the Nissan Frontier.

Hybrids "are selling well, but they're still a small percentage of total activity," said Jeff Beddow, a spokesman for the Hawaii Automobile Dealers' Association. "For the most part, people continue to buy what they want" regardless of gas prices.

Hybrids work by combining a gasoline-powered engine with an electric motor. The electric motor runs the car when it is charged and the gas engine takes over when needed. Electric power is provided by batteries that automatically charge when the brakes are applied. They don't need to be plugged into an external charger.

For consumers interested in saving money on gasoline, the initially higher cost of the hybrid must be taken into account.

Because of the additional engine components, hybrids fetch a slight premium to their traditional counterparts and typically aren't discounted by dealers. That difference is partly offset by a $1,500 federal tax deduction for those that purchase a hybrid this year. That translates into about a $420 savings for someone in the 28 percent tax bracket.

Still, the 2004 Honda Civic Hybrid has a starting price of $19,650 which is about a $2,400 premium over its non-hybrid counterpart. Recouping that added cost could take the typical driver about eight years at today's gasoline prices. Of course, the higher gas prices rise, the quicker the hybrid will pay for itself, said Morrie Stoebner, president of Honda Windward in Käne'ohe.

"As prices gradually go higher, we'll see a gradual shift" to more fuel-efficient cars, Stoebner said. "But I don't think you'll see a major shift unless it gets to $2.50 or $3 a gallon and stays there."

About five of the 125 or so vehicles sold each month at Honda Windward are Civic Hybrids, Stoebner said. Customers looking to buy a Civic Hybrid may have to special order one depending on the options sought, he added.

Nationally, sales of hybrids are gaining momentum. Civic Hybrid sales rose nearly 11 percent through April to 9,023 vehicles. Sales of Toyota's Prius were up about 78 percent nationwide through April to 13,602 vehicles.

Regardless of the level of gas prices, sales of hybrids are forecast to grow as manufacturers bring more models to market and prices decline. Seven new hybrids are expected to be introduced this year, and four next year, J.D. Power reports.

The hybrids appeal not just to drivers hoping to cut gasoline costs, but also to those who see it as a way to protect the environment.

"Interest in the environment and higher fuel prices together — that's really the target market," said Walter McManus, executive director of global forecasting for J.D. Power. "People are not so much buying them for the savings, but for the environmental impact and image. They want to be seen as doing something for the environment."

Indeed, hybrid driver Steve Butala, a mechanical engineer in Kailua, said he switched from a van to a 2004-model Prius in October mainly for social and environmental reasons.

"I was going to buy an SUV, but I just couldn't bring myself to do it," said Butala, who figures to save $500 to $600 a year on gasoline. "I just felt like I wanted to do something to do my part."

Butala said trips up the Pali Highway and the H-3 freeway present no problems. The 2004 Prius goes from 0-60 miles per hour in 10.5 seconds compared with 11.6 seconds for the Civic Hybrid, according to Consumer Guide.

Carol Cunningham, who has put 19,600 miles on her gold Civic Hybrid that she purchased in February 2003, agreed that performance wasn't an issue.

Cunningham, who regularly drives between her home in Mäkaha to the North Shore to shoot surfing photos, said she switched to a hybrid when oil prices spiked before U.S. military operations in Iraq.

"I remember what it's like when oil gets tight," said Cunningham, referring to the gasoline shortages of the 1970s.

"I feel really smug now," she added. "All these people are saying, 'what are we going to do about the gas (prices)?'

"I say, 'Duh — buy a hybrid.' "

Reach Sean Hao at 525-8093 or shao@honoluluadvertiser.com.

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Source: The Honolulu Advertiser


Correction: A graphic with a previous version of this story showed an incorrect cost total after eight years for the Civic Hybrid.