From: Joseph Mann, South Florida Sun-Sentinel
Published April 19, 2005 12:00 AM

High Gas Prices Push Car Buyers to Hybrids

Ted Kelley, a private investigator in Boca Raton, is a happy convert to hybrid auto technology.


Kelley, who puts about 3,500 miles a month on his car visiting clients as far north as Jacksonville, recently purchased a Toyota Prius. The hybrid vehicle -- which runs on a gasoline engine linked to a battery-powered electric motor -- is saving Kelley about $400 a month on gasoline.


"I was driving a Land Rover before and getting about 13-14 miles per gallon," said Kelley, whose 2005 Prius advertises average mileage of 55 miles per gallon. "I had to fill up after about 260 miles with the other car. Now I can get about 500 to 600 miles out of a tank full," he said. "Gas prices are only going to get worse and I'd rather have that money myself."


Like thousands of other Americans, Kelley decided to move to a hybrid vehicle as gas prices recently hit record highs. Even though pump prices have slipped over the last week or so, retail prices nationwide are still averaging about 42 cents per gallon -- or 23 percent -- more than last year. Prices in South Florida are averaging as much as 27 percent higher. Than means people who last year paid $30 to fill up their tanks with regular gas now are paying $37 or more.


But some consumers are still willing to buy SUVs -- and pay hefty gas bills -- because they prefer the comfort, space and other amenities these vehicles offer.


John Morell and his wife Gwen recently purchased a new, 8-cylinder Ford Expedition from Maroone Ford in Margate. "We've had SUVs for about the last ten years, and we like the features," said Morell, a building inspector. These include roominess, the third row of seats that can be raised or lowered automatically and "a great field of vision."


"Gas was a consideration but the cost wasn't going to be much different from what we were used to paying," he added, "and there was a good incentive."


South Florida auto dealers report a wave of new interest in hybrids this year. And, they say, while sales of gas-guzzling SUVs are generally down, manufacturers are trying to maintain sales by increasing incentives.


"The public wants environmentally friendly and fuel efficient vehicles and there is tremendous demand for hybrids," said Mike Maroone, president and chief operating officer of Fort Lauderdale-based AutoNation Inc., the country's largest retailer of cars and light trucks. AutoNation, with 356 new car franchises nationwide and 33 dealerships in South Florida, has waiting lists of up to 60 days for hybrids, depending on the location. "This is better than last year," Maroone added, "when some customers had to wait 6-8 months for a new hybrid."


Kelley, who bought his Prius at Al Hendrickson Toyota in Coconut Creek, was lucky. "There were 450 cars on the lot when I went in and only one Prius, so I got it right away. None of the other dealers I visited had them," he said. Kelley also struck a good deal for his car, since he didn't have to pay a premium.


"The Prius is still hot," said Al Hendrickson Sr. "We don't have one in stock right now and we sell them just as fast as we get them"


"We introduced the Accord hybrid in December and it's been a big seller," said Sam Assisi, general sales director at Pompano Honda in Pompano Beach. Honda also offers two other hybrid models and one of them, the Civic hybrid, remains a strong seller, he added.


Because of heavy demand, some dealers charge a premium of $2,000 to $4,000 for new hybrids, industry sources say, by tacking on a fee called "market value adjustment" to the list price. Demand for used Prius hybrids in some areas is so strong that they are selling for more than new models, they said.


Sales of SUVs "are off by double-digits" in some markets, Maroone said. But since SUVs are among auto manufacturers' most profitable lines, they are trying to lure new buyers with rebates between $3,000 and $5,000.


Hybrids typically sell for $2,000 to $4,000 more than comparable gasoline-powered vehicles because of higher production costs. Toyota says the list price for its most economical Prius is $20,975, while Honda's lowest-price Accord hybrid is listed at $30,140. These figures do not include dealer handling fees, options or the premium many dealers charge. But they attract consumers, not only because of better gas mileage, but also because they offer reduced tailpipe emissions and a federal tax break for buying a new model.


Sales of Toyota, Honda and Ford hybrids reached a high of 84,199 last year, up sharply from 29,916 in 2003. Manufacturers currently can sell as many hybrids as they produce. One drag on production is the shortage of a special nickel-metal hydride battery used in these vehicles. This battery recharges itself when cruising on its gas engine and when braking, and is used to power the car at lower speeds.


So far, Toyota, Honda and Ford hybrids are the only such models currently available in the United States. But Chevrolet, Mazda, Saturn and Nissan are planning to launch additional hybrid cars, while Lexus, Toyota and Mercury are coming out with hybrid SUVs.


J.D. Power-LMC Automotive Forecasting Service predicts that hybrid sales will grow to about 200,000 units this year, and peak at about 535,000 units in 2011. Behind this leveling off of sales are the high cost of hybrids relative to non-hybrid models and the likelihood that manufacturers will produce more fuel-efficient gasoline and diesel motors in the future.


Even though sales of hybrids have mushroomed in recent years, these vehicles accounted for only about one-half of one percent of total vehicles sold last year.


To see more of the South Florida Sun-Sentinel -- including its homes, jobs, cars and other classified listings -- or to subscribe to the newspaper, go to http://www.sun-sentinel.com. Copyright (c) 2005, South Florida Sun-Sentinel Distributed by Knight Ridder/Tribune Business News.


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