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Slow Sales of Honda Insight Give Insight into Hybrid Market

| Wednesday December 23rd, 2009 | 11 Comments

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.


▼▼▼      11 Comments     ▼▼▼

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  • http://twitter.com/Wilson_Energy John D. Wilson

    I've seen the Prius filling multiple markets, including high mileage commercial uses. One big advantage of the Prius is its quality, it is correctly perceived as a vehicle that is reliable in operation and comfort. Honda's lower-end vehicles are pretty reliable, but can be noisy and not quite so comfortable. I'm not talking luxury stuff here, just noise level, fit in the seats, that sort of thing. So if you are a high mileage driver, it makes sense to enter the market a bit higher than Honda has positioned itself.

    Also it would have made sense to talk about the Ford Fusion hybrid in this context.

  • unknown

    First off the Insight is not really that much cheaper than the 2010 Prius. The base modle of the Insight does not come equipped with the same safety features(Vehicle Stability Assist with Traction Control) as the base (trim 2) Prius. If you want to drive a car that doesn't have this I hope you live in a dry hot climate. Then there is the fact that if you are financing the entire amount of the cars then the EX insight & the Prius II price difference is covered by the Prius's advantage of more mpg. If Honda wanted to steal some Prius customers then they should have found a way to come in a lot lower. The Insight costs slightly less. The Insight gets less mpg's. The Insight is worth less & is worthless in my opinion. I think I remember reading how the drivetrain for the Insight was the same length as the Fit. So why not put it in the Fit save money by using the existing frame & pass those savings onto the consumer? If the Insight EX was priced a few thousand less than the 2010 Prius II then there might have been justification for calling it a “cheaper” hybrid. The Ford Fusion Hybrid/Civic Hybrid/any other sedan hybrid model is not in this discussion because they are not dedicated hybrids nor are the cost effective. Why pay more for less?

  • TED

    I predict Toyota will prove there IS a market for less expensive hybrids when they start selling their hybrid system in smaller (Yaris?) size vehicles. I would also be interested in a hybridized Fit, if the price premium was no more than $2,000 for the powertrain.

  • Whyknot1

    The hybrid market would take off like a rocket if someone out there created a quality hybrid in the $10-15,000 range with great financing offered. Pipe dream? Well, then, when gas becomes pricey, coupled with a recession, people won't be buying anything.

  • http://www.vladan.fr Vladan

    Hybrid cars will stays as a “luxury” market. You “pay” the fact that there are 2 engins in the car, so the expenses are more important than in classic car. The time will change with full electric cars, with sufficient range which will cost cheaper too…

  • ED

    I'm in the gen-y market Honda was targeting, and I bought one. I don't regret my purchase, AND I get much higher mpg than epa. I was going to get a fit, but then decided I could go up a little bit more in price and get the Insight. The jump from the Fit to the Prius was just too much.

    • GE

      JUST CURIOUS WHAT KIND OF MILEAGE YOU ARE GETTING WITH YOUR INSIGHT ON THE HIGHWAY AND YOUR AVERAGE SPEED?

      • ED

        I can usually get a bit above 50 mpg on the highway going about 70 mph, unless it's super windy or I'm climbing the whole way.

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  • NickM

    Italy sales 2009 (from january to november):

    Insight 3738
    Civic Hybrid 142
    Toyota Prius (II + III) 2072

    In Italy, Prius costs 6.000 Euro more than Insight !

  • joegoe

    The reason the Insight II doesn't sell is price. It is at least $3,000 to expensive. More or less $5,000 more than comparably equipped Fit. They said they had the hybrid premium down to < $2,000 a couple of years ago.

    The Fit could be so much more in the fuel efficiency area with a simple change to taller gear ratios. It worked in the 80's.

  • joegoe

    The reason the Insight II doesn't sell is price. It is at least $3,000 to expensive. More or less $5,000 more than comparably equipped Fit. They said they had the hybrid premium down to < $2,000 a couple of years ago.

    The Fit could be so much more in the fuel efficiency area with a simple change to taller gear ratios. It worked in the 80's.