Slow Sales of Honda Insight Give Insight into Hybrid Market

Are hybrid cars still considered niche, or even — dare we say — “luxury” purchases?

The failure of the lower-cost Honda Insight hybrid to dent the market for the Prius has some in the auto industry answering yes. Business Week reports that the Insight, which was introduced this year with a base MSRP of $19,800, over $2,000 less than the Prius, is still being outsold by Toyota’s car 6 to 1.

The Insight’s sluggish sales is proving a useful cautionary tale to other automakers looking to catch up to Toyota in the hybrid market, and some have already made major strategic shifts as a result.

General Motors, which will introduce the Volt late next year through  its Chevy brand, has scrapped plans for a “Prius-killer” hybrid sedan that would get 53 miles to the gallon. Part of the reason, no doubt, is that the beleaguered car company needs to focus its energies on making the Volt successful. But the other big reason is Prius’ merciless crushing of the Insight.

Rich Liberal Elitists Driving Fancy Hybrid Cars

The Insight, which is based on the Honda Fit subcompact body, was meant to be a low-budg. hybrid, a car for a market segment that may not exist. Honda hoped to sell 40,000 Insights this year, but now admits it will fall far short of that goal. From the Business Week article:

…it’s not clear that the Insight will ever seriously challenge the Prius because Honda has overlooked a lesson Toyota learned years ago: Hybrids aren’t a budget purchase.

According to Business Week, many Prius owners make more than $100,000 a year. The 3rd generation Prius, which went on sale this year, features a bigger, more powerful engine, more passenger space, and “Lexus” touches. Not to mention egregiously expensive — yet environmentally snazzy — options like a solar powered roof ($3,600).

A fully loaded Prius costs $32,500 — about as much as a Volt, based on its rumored MSRP of $40,000, minus a $7,500 federal tax credit.

In fact, the Insight’s weak showing could be good news for the Volt.

Even if its final price is less than $40,000, the Volt will still be thousands more than a fully-loaded Accord, Sonata or Mazda6, all of which top out around $28,000 for this year’s model. But steady demand for the Prius suggests there is a larger market for over-priced, environmentally friendly cars than critics contend.

BC (Ben) Upham is a freelance writer based in Los Angeles. He has written for the New York Times, and was a writer and editor for News Communications, Inc., a local paper consortium serving Manhattan. When he's not blogging on green issues -- and especially renewable energy -- he's hiking in the Angeles Mountains or hanging out at El Matador.