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Prius Supplies Increase as Sales Slow

February 8, 2007
Prius sales are down as federal tax credits for the popular hybrid wither, although purchasers of General Motors hybrids can still cash in at taxpayer expense, according to the latest IRS releases.

Toyota says that incentives on the Prius hybrid are here to stay because the little car is now a core Toyota product. More than 100,000 of the gasoline-electric hybrid are sold each year and the automaker considers the Prius to be a mainstream vehicle.

Toyota offered the first incentives on the Prius in January with leasing deals and low-rate loans in some parts of the country.

Until recently, the Prius often commanded a price higher than the manufacturers' suggested retail sticker price.

Toyota has increased production of the Prius to 150,000 units a year for the U.S. just as some sales resistance to the hybrid began to pick up, in part because of declining gasoline prices and, perhaps, falling tax credits.

There is now a 30-day supply of the Prius in the U.S which is still below the industry standard 65 days for most vehicles. For most of the last several years, particularly as gas prices reached record highs the Prius supply was measured in hours not days.

Tax Credit Phase-Out

As for the tax credits, after reviewing the fourth quarter sales of Toyota Motor Sales USA Inc. the Internal Revenue Service (IRS) announced that purchasers of Toyota and Lexus vehicles may continue to claim the Alternative Motor Vehicle Credit.

Given the number of vehicles sold, the phase-out period for Toyota vehicles began on October 1, 2006.

Toyota sold 67,857 qualifying vehicles to retail dealers in the quarter ending December 31, 2006. This brings the cumulative sales of qualified Toyota hybrid vehicles sold from the period of Jan. 1, 2006, through Dec. 31, 2006, to 212,073.

Taxpayers may claim the full amount of the credit up to the end of the first calendar quarter after the quarter in which the manufacturer records its sale of the 60,000th qualified vehicle. For the second and third calendar quarters after the quarter in which the 60,000th vehicle is sold, taxpayers may claim 50 percent of the credit.

For the fourth and fifth calendar quarters, taxpayers may claim 25 percent of the credit. No credit is allowed after the fifth quarter. The sale of Toyota's 60,000th qualified vehicle occurred in the quarter ending September 30, 2006.

The applicable credit amounts are as follows:

See Related Item: Hybrid Cars and Alternative Motor Vehicles

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