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Hybrid Sales and Prices Climb in Lockstep with Gas Prices

Toyota slashes Prius incentives, jacks up price as demand jumps

By Joe Benton
ConsumerAffairs.com

May 16, 2008
With U.S. gasoline prices climbing to unprecedented levels, consumers are turning to the popular Prius hybrid as well as other small vehicles to help postpone visits to the gas pump.

Dealer inventory of the Prius is at the lowest level in two years. As of April 30, dealers had a seven-day Prius supply.

While the Prius supply dwindles, U.S. gas prices continue to scorch the record book. The average national price for regular gasoline jumped almost 2 cents over night to reach $3.758, another record. Mid-grade gasoline sells for $4.010 and premium hit $4.154.

Diesel fuel continued a relentless move into record territory reaching $4.455.

The average price of gasoline in Alaska is now $4.022. The lowest statewide average is found in Arizona at $3.548

The Prius is sold in 40 countries and Toyota has now sold more than 1 million of the little hybrids worldwide. The U.S. is by far the best Prius market with 592,000 sales. Europeans, accustomed to high gas prices, have long relied on small, stick-shift cars with small-displacement diesel and gas engines, achieving mileage that often exceeds the Prius.

Faced with growing consumer demand in the U.S., the Japanese automaker has slashed sales incentives on the car and announced plans to raise the price of the Prius by $400 with the next model year.

Delivery time for a new Prius is now two weeks. Toyota manufactures the cars in Japan and ships them to Asia and Europe as well as the U.S.

Prius sales in the U.S. increased 67 percent in April as gasoline prices pounded the record book. As gas prices climbed, Toyota cut the value of sales promotions from a high of $1,471 all the way down to just $123 a vehicle.

Toyota announced the $400 for the Prius May 2. The Prius now sells for an average price of $25,274 or $869 more than a year ago. The 1.8 percent increase will raise the average price of the Prius to $25,674.

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