Some customers also amortize costs over the life-time of the vehicle. But some don't and those used vehicles are available for a nice price.

The first time I did the calculations, fuel costs $1.35/gal. and the hybrid premium was about $5k. Since then, the price of fuel doubled, $2.75/gal. and I picked up a used hybrid for $824 over the price of Scion xB. Then there is 'the learning curve', the tuition of life.

The first generation of new technology teaches many valuable lessons; the second more; and it usually takes the third to really 'get it right.' And time marches on.

Bob Wilson

Operation Iraqi Oil Freedom:

Automatic, stock, project car.

My other 1500 cc car:

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Free speech, dialog and knowledge thrives without the poison of SPAM.

so how did toyota and honda manage to do it and not the largest auto manufacturer in the world? i don't mean to be flippant but i'm just applying your line of reasoning to those companies. assuming toyota and honda operate not very differently from gmc in terms of reluctance to waste money either: a) toyota and honda managed to find a way to make it economically work or b) were willing to eat the costs themselves in order to ... own the market? gain first mover advantage? get great pr?

both honda and toyota are working on arguably the same number of projects as gm to improve gas mileage: hydrogen fuel cells, clean diesels, variable displacement engines, biodiesels, cng.

one plausible argument is that japan and by extension japanese auto manufacturers are more keenly aware of the problem posed by increasing dependence on foreign oil. japan imports nearly all of its oil and so investing in r&d to increase mpg is natural and imperative.

Maybe I'm wrong, but I do not think that was his reasoning or justification. It seemed more like a commentary to me.

That does seem like a plausible argument to me as well. As they say, hindsight is always 20/20. On the other hand, some have better foresight than others.

I would guess this is the big difference between GM and Honda/Toyota:

The Japanese makers were willing to initially sell the hybrids at a loss in order to gain market dominance in that category of vehicle. As they sold more more hybrids, the effective cost per vehicle decreased due to economy of scale. Now Toyota and Honda sell their hybrids for a profit.

GM just wasn't willing to take that risk. As far as I can tell, they STILL aren't. They cite the Vue and 2-mode vehicles, but they just don't exist. They're "We're Gonna" products.

The ironic thing is that GM's desire to play it safe is a big part of why they're in trouble. Their "safe bet" (bulky, unreliable, gas-buzzling hulks) now pose a much bigger risk to the organization's future than adopting smaller, cleaner, reliable, fuel-efficient vehicles.

Mr. Kite and AshenGrey pretty much answered your questions in their follow-ups, so I won't re-tread their ground. I will add this......

Toyota's strategy has been all along to set the IMA as an industry standard and generate revenue by selling to other OEMs. That is one place where the 2-Mode has hampered their progress. DCX & BMW have looked at both systems and opted to work with the 2-Mode. Part of the rationale there is that in working with other manufacturers, Toyota has not been willing to provide "the latest" technology. The system that Ford is using in the Escape is the Aisin based system that finished 2nd to the IMA in the Toyota "bake-off" of technologies. Toyota has been willing to accept some near term and mid-term losses in order to attempt to get their system established as industry standard.

The Honda system is not much different in design and function than the GM Silverado FAS system. It is applied to a much more efficient vehicle than the GM system and also doesn't have to take into account the other system capabilities that the GM system has tried to simultaneously manage. On the way to develop the next gen version of that system, it was determined that 2-Mode is a better answer for truck and SUV applications.

The other factor is that many at GM felt at the time that the path to FCEV was closer than it really may have been. Some of the focus that could have been directed towards speeding up hybrid development was directed to speeding up FCEV development.

Peace,

Martin

I am NOT the official voice of GM with respect to Hybrid issues

I am NOT the official voice of GM with respect to Hybrid issues

I am NOT the official voice of GM with respect to Hybrid issues

There really is not that big a difference, Until I see proof (which I'm sure I won't) I would believe that they are selling at a Material Cost profit, but that the capital, engineering and tooling costs are still under water. Question becomes how far under water are you willing to go. Toyota has much deeper pockets than any other company in the industry, so they can afford to ride an unprofitable venture longer until it does become profitable. And it eventually will.

I recognize that my situation is different from most on this newsgroup, but I've seen, felt, smelled, and driven the products. I was two hours short of having a VUE Greenline to drive to Chicago when I traveled out there June 23rd - 26th (the guy who was swapping vehicles with me was delayed at an airport and I had to leave).

I know it doesn't make sense to this group, but it's actually what's keeping the boat afloat. Even though the SUV market is shrinking AND GM sales of mid-sized SUVs (Trailblazer / Envoy / Rainer) is abysmal lately, the 2007 Tahoe, Yukon, and Escalade line continues to post month over month and year over year increases in sales since launching in January. That's even with gas at $3/gallon. On a dollar for dollar basis they are the most profitable vehicles that the company makes and sales are increasing. I'd say that supports that part of the turn-around strategy.

The second part of the strategy is the launch of Body Frame Integral Cross-Over Vehicles based on a new Front Wheel Drive chassis. The Saturn Outlook and the GMC Acadia launch within the next couple months and they provide significantly better fuel economy than the Tahoe / Yukon / Escalade line, which is already best in their class of vehicles. The Outlook and Acadia fit somewhere between a Lexus RX / Acura MDX and Tahoe in terms of size and mass and will achieve f/e somewhere in the mid 20's. People who use SUVs primarily for people hauling and some stuff hauling will gravitate to the cross-overs. People who use them as work and tow type vehicles will gravitate towards the truck based SUVs.

Peace,

Martin

I am NOT the official voice of GM with respect to Hybrid issues

I am NOT the official voice of GM with respect to Hybrid issues

I am NOT the official voice of GM with respect to Hybrid issues

The figure I've heard is Toyota has spent one billion dollars on hybrids.

61.5mpg lifetime - 82mpg in recent months

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www.cleanmpg.com

"fanatic" is what the lazy call the dedicated

I'd say that sounds about right. Now amortize that amount over the total number of hybrids sold and you'll get a number that exceeds the option price. Which means, when you add the amortized figure (the number you just calculated) plus the material cost per unit, you are not making any money on per unit sales.

You are gaining market share, consumer goodwill, and one helluva pr machine. If you amortize the cost over all Toyota sales (hybrid & non-hybrid) it might turn out to be cheap advertising.

Peace,

Martin

I am NOT the official voice of GM with respect to Hybrid issues

I am NOT the official voice of GM with respect to Hybrid issues

I am NOT the official voice of GM with respect to Hybrid issues

Actually it makes perfect sense if your strategy is short term survival. However, if GM plans on being around long term it eventually has to quite relying on these sales to keep it afloat and start concentrating on the future. Intel is a great example of another company that is now in a struggle for long term viability because it failed to adapt to the future market quickly enough. It thought that it's dominance in the processor department would keep it on top. But as wireless has emerged and the PC market has matured they have failed to position themselves for future growth. I think this is similar to what is going on with GM.

GM has some tough choices to make going forward, but at some point they have to decide when they are going to forgo short term revenue for long term viability.

TI is another good example of company that was faced with these issues 15 years ago and was forced to reinvent itself. And because of it's decisions to forgo short term success for long term growth it is now in a position to dominate the mobile device market.

not according to toyota's spokesman:

"The hybrids have been profitable since very early on," said Toyota Motor Sales U.S.A. spokesman Wade Hoyt. "We're not losing money on it. It's not a charity operation. We see the market as expanding."

i see no reason for toyota to lie in this instance. it would be better pr, if true, for them to say "we're losing money on every sale, but we think clean air for our kids to breath is worth it."

i think it is too easy to say that hybrids are a money losing proposition for auto manufacturers. both toyota and honda have figured out a way to profit off of their hybrids. the initial higher capital costs were passed along to the consumer but honda and toyota lobbied for tax incentives to offset the costs in effect having the government fund their development. dealers are certainly making a tidy profit and are quite happy. most prius and civic hybrid dealers in the bay area are charging $2k to $3k over msrp.

when i bought my hch, the dealer told me honestly that the hch is making up for all the lower margin non-hybrid sales that they are having to do.