KAI RYSSDAL: The auto industry's another part of the economy that's in trouble. Detroit's spent most of the past year-and-a-half trying to lure buyers with deep discounts and 0 percent financing. Toyota's been going gangbusters with its smaller, more economical cars. Which is why today's news about the Prius is surprising.
Starting this month the Japanese automaker's offering no-interest loans and other incentives to boost sales of those boxy gas-electric hybrids. Quite a turnaround considering just last year Prius fans were waiting months for delivery or paying premiums to get their hands on one. Sarah Gardner reports from the Marketplace Sustainability Desk.
SARAH GARDNER: The news must be painful for all those drivers who paid top dollar just to get a used Prius. Toyota and some other hybrid dealers are now shouting "Come and get 'em." Mark McCready at CarsDirect.com says he's surprised at how low Toyota's willing to go to sell a Prius.
MARK MCCREADY: You're seeing zero financing for 24 months and 2.9 percent for 36 months. If you think of where current interest rates are, which are in the upper 6's, that's a pretty big buydown for Toyota.
So what happened? Gas prices, for one. They're down about 27 percent from that $3 high last summer. The federal tax credit on hybrids is on its way out. And carmakers may be close to exhausting the market of eco-driven buyers, says auto consultant Joe Phillippi.
JOE PHILLIPPI: Once you get past the early adopters, then you gotta go out and actually sell these things. Along with the fact that Toyota is boosting capacity for the Prius by a fairly substantial amount.
Toyota aims to rev up Prius sales 50 percent this year. The automaker hopes the incentives will help them reach that goal and one other. It wants to reshape the Prius' image as a vehicle for all Americans, not just tree-hugging, latte-sipping Coasters.
I'm Sarah Gardner for Marketplace.
“I think the best compliment I can give is not to say how much your programs have taught me (a ton), but how much Marketplace has motivated me to go out and teach myself.” – Michael in Arlington, VABEFORE YOU GO