Waiting Game: Patience Pays When Shopping for a Hybrid
By KAREN BLUMENTHAL
July 30, 2008; Page D1

So you want to buy a Prius. I do, too -- and both of us will have to get in line.

When gasoline prices hit $4 a gallon a couple of months ago, demand for smaller cars -- hybrids and Priuses in particular -- soared. At many Toyota dealers, the wait for the popular hybrid has grown to roughly three months since May, and prices have climbed steeply, too.

On the face of it, that would indicate the dealers hold all the cards. But in the wacky and weird world of new-car buying, that extraordinary demand could turn out to be a good thing for patient buyers. Because the lead time is so long, picky but determined buyers have the unusual luxury of almost custom-ordering their cars. That can be cheaper than negotiating for whatever cars happen to be on a dealer's lot, especially if those have expensive options you don't want.

The price sticker on a 2008 Prius touts the hybrid's high-mileage ratings as SUVs sit in the background.
First, though, you should figure out if a Prius -- or any hybrid -- will provide the savings you expect. The Prius's gas mileage averages in the 45-miles-per-gallon range; that's impressive, but the base price, following a $400 increase in May and a $500 jump that goes into effect Friday, is fairly steep for a car of its size, especially if your main goal is to save money by buying less gasoline. Next month, the basic Prius will start at $22,720, while the sportier Touring version will have a base price just under $25,000, including destination charges.

That's more than the roughly $21,000 for a basic Camry, which is larger, and more than other reasonably fuel-efficient sedans, like the Honda Civic, Toyota Corolla, Nissan Altima or Ford Focus. It's worth calculating your fuel savings to see how long it will take to make up the price difference.

The price has shot up, too. Kelley Blue Book, which tracks the actual prices paid, says the average Prius now sells for $1,000 to $2,000 above the manufacturer's suggested retail price. Toyota of Richardson, in the Dallas area, is charging $2,500 above MSRP, for example. Earlier this year, you could negotiate a price a few hundred dollars below MSRP.

But you don't have to pay a premium if you can shop around. Toyota frowns on prices above the sticker because it angers consumers, and several dealers contacted around the country said they were selling the cars at the sticker price.

If you're committed for environmental reasons or want to make a political statement with that pointy Prius nose, you'll have to wait. Toyota Motor Corp. supplied about 175,000 of the cars to the U.S. last year, when there was no waiting, and expects to offer about the same number this year, largely because it can't get enough batteries and other components to boost production.

May and June were particularly tight, with Prius sales down 36% from a year earlier, when dealers had more inventory. Currently, Toyota says its dealers have a one- to two-day supply, meaning that virtually every car is spoken for before it reaches the lot.

Dealers get Prius allocations from Toyota roughly every two weeks, and because they know exactly what their buyers want, they can request cars that fit customers' orders. With supply so tight, the results don't always match up, says Ray Murphy, new-car manager at Toyota of Des Moines, Iowa, where about 100 people are on a Prius waiting list. Those deliveries go to buyers who are less particular and more willing to pay for color and options they didn't necessarily want. In other words, the more flexible you are, the more quickly you'll get a car.

The best strategy for buyers is to email multiple dealers within an hour's drive to see what they're charging and how willing they are to help you find the exact car you want. Many dealers require a $500 refundable deposit to get on their Prius waiting lists.

When I first shopped for a Prius in February, a dealer in the Dallas area had a car in the color I wanted, but it included a $2,580 option package with a six-CD changer and Bluetooth, as well as $350 of extras like "lusterizing sealant."

With $900 off the MSRP, the price was still $25,400. Even if I had negotiated brilliantly and brought the price down a bit further, I would have paid for options I didn't want.

When I finally joined a waiting list, Toyota had raised the base price. But I was able to specify a $575 basic-option package and a couple of extras that could be easily added. Though paying MSRP felt almost immoral, my car would cost about $750 less than the one I found back in February.