Money doesn't grow on trees, but it does grow from something else green -- hybrid vehicles. From expensive pet projects, Honda and Toyota have refined the state of hybrids into a money-making venture for their companies. Now, with sales posting long-term growth trends, these vehicles and the profits they bring have become an increasingly integral part of the company.
Some suspected the price war between 2010 Toyota's Prius, priced at $21,750, and the 2010 Honda Insight, priced at $20,470, would hurt the companies' bottom lines. However, recently revealed information from the Japanese newspaper Nikkei indicates that both hybrids have a profit margin of approximately $3,100.
This figure seems especially staggering given that last year GM reportedly lost $1,271 per vehicle sold, while Ford lost $451 per vehicle sold. Toyota managed a profit, but only $1,715 per vehicle sold, while Honda pulled in $1,259 on average per vehicle.
Part of the advantage of hybrids is that there's less discounting and more demand, though production numbers are lower. The vehicles also are typically priced higher. However, the new models from Honda and Toyota that toe the psychologically significant $20,000 price level are coming much closer to traditional sedan prices than ever before.
According to the Green Car Congress, a hybrid advocacy group, hybrids have finally achieved profit parity with small-engine gas-only vehicles, all while prices have dropped.
Assuming that the numbers are accurate, the new state of hybrid profitability represents a win-win situation -- a win to customers, who pay less for gas and score lower prices; a win for businesses who are turning bigger profits; and a win for the environment, with less fossil fuels burned, reducing emissions of carbon and refining-stage emissions of sulfates, nitrates, and other compounds naturally trapped in oil deposits.
It also offers hope to the electric vehicle industry, which, like the hybrid industry in its early years, features losses per vehicle and fledgling technology.