Despite higher hybrid prices, now might still be the time to buy
Even if gas prices decline, auto loan interest rates will probably rise
All about interest rates
Just a few weeks ago special lease and cash back offers were available on some of the hottest hybrid cars. Even the Toyota Prius qualified for as much as $500 cash back. However, $100+ oil and an earthquake-caused auto supply shortage has squashed most of those deals.
Eventually, however, supplies will increase and gas prices will probably pull back. Consequently, cheaper hybrid prices might be down the road, but will rising interest rates squash those price declines?
While interest rates are expected to stay at about 3 – 4 percent for top credit scores – versus 7 – 8 percent – through the rest of this year, higher interest rates are almost inevitable if the economy continues to creep out of recession according to many economists. As a result, even if hybrid prices do drop a bit as supplies increase or demand decreases, higher interest rates might offset this difference.
And one has to ask, are gas prices really going to decrease? How much? When?
If gasoline prices do decline, future spikes still seem inevitable based purely on the ongoing uncertainty and history of the Middle East and North Africa. However, even if stability is reached in this corner of the world and gas prices recede, cheaper gas will simply fire up the global economy, including in the BRIC countries that will push demand higher than ever.
One way or another, significantly cheaper gas prices seem less plausible than higher gasoline prices.
Consequently, if $3.50 – 4.00 gas is the new norm, with occasional spikes higher, then demand for many hybrids could keep prices on the higher end for years. However, now might offer the best interest rates possible for many car buyers.
Related –> Prius and hybrid shopping: Just panic buying today?
It’ll be interesting to see how gas prices affect sales over the next few months, even if they decline.
Still, hybrid sales are on the rise, but relative to conventional vehicles they are still basically irrelevant.
I think that’s a real interesting point, John. Yet, think about how much of our economy is built around an auto industry that is driven almost exclusively by buyers that can’t really afford to buy.
If you have to borrow money to buy a car, you can’t afford it.
this might be dated but it’s pretty revealing:
” For a sense of sales numbers of the newest generation of electric cars as compared to SUVs The Free Press makes this comparison: “In the first two months of the year, Chevrolet sold 602 Volts while Nissan sold 154 Leafs. In the same period, by contrast, Cadillac sold 2,793 Escalades and Lincoln sold 1,193 Navigators.”
http://www.freep.com/article/20110328/NEWS06/103280344/Sales-fuel-efficient-autos-stall-despite-high-gas-prices?odyssey=tab|topnews|text|FRONTPAGE