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Reports of Prius Price Gouging Rise with Gas Prices

Premiums of up to $10,000 can be the price of Prius envy

By Joe Benton
ConsumerAffairs.com

June 12, 2008

One recent Prius buyer reported paying a $5,000 premium for his hybrid.

A woman in Southern California complained on the Web site PriusChat.Com that she "called 15 dealerships in my area and every single one is charging a markup over MSRP, ranging from $2,100 to $10,000."

Gasoline prices have consumers lining up for the popular hybrid but Toyota production of the car is so far unable to match the increased demand.

Supply of the Prius is so limited that sales of the hybrid declined in May by 37.5 percent to 15,011 units as compared with 24,009 in May 2007.

"We're pushing for every bit of production we can get," a Toyota spokesman reported.

Availability of the hybrid is constrained because Japan is the one and only place Toyota has assembled suppliers to build the many specialized components for the Prius hybrid system. A second supply and production network would be cost prohibitive for the automaker, according to the spokesman.

The global manufacturing capacity for the Prius remains at 250,000 units or about 21,000 per month with the automaker allocating roughly 15,000 per month for sale in the U.S.

That means Toyota will ship between 170,000 and 180,000 Priuses here this year, the same number as in 2007.

In short, supply will not meet demand and some willing consumers will pay the price. Toyota sold 79,675 Priuses in the first five months of 2008, up from the 76,747 sold in the same period last year and demand for the Prius is growing.

"We've been through this before. We have a 2005 Prius and did wind up paying a $3,000 premium," said the Southern California Prius owner. "We don't want to do it again but want a second Prius."

She is not alone.

"I feel a little better now," retorted the proud new owner of a 2008 Prius. "The dealer raised the price $5,000 over MSRP."

In the world of $4 a gallon gasoline and many thousands of dollars in hybrid premiums, some potential Prius consumers still cling to hope.

"I finally convinced my husband that we need a Prius only to find that wait lists are back," said a Prius shopper in Washington, D.C. "I don't mind waiting as long as we don't have to pay over MSRP. The dealerships I've talked to so far have all quoted me between $1,500 to $2,500 over MSRP. Anyone paid below MSRP in the past few weeks?"

Probably not, at least in the Washington, D.C. metropolitan area. A Prius owner from Long Island advised waiting until 2009.

Waiting is a common theme among expectant Prius owners. Long waiting lists for the hybrid are as common as price-gouging around Toyota lots.

One Oregon Prius owner said he "called the big dealership in Portland and was told they have 70 plus on their waiting list."

Those suffering from Prius envy can be a patient lot however.

"I am entering my expected delivery window tomorrow," wrote one. "The more I wait, the more this reminds me of having a baby," she said.

"My due date is June 23 but I could deliver early according to the salesman," responded another. "I have my primary and secondary routes planned from home and office to the credit union where delivery is planned," the Prian said.

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