Kevin McCormally: I am Kevin McCormally of Kiplinger's and I am here with Mark Solheim, the Automotive Editor of Kiplinger's Personal Finance Magazine to talk about Hybrid Vehicles. Mark, gas prices just keep soaring. Has this changed the economics of buying a hybrid vehicle?
Mark Solheim: It's changed it slightly. The more expensive gas is, the more cost effective it is to buy a hybrid because they get such fantastic fuel economy, but unless you buy the very smallest hybrids, you are probably not going to get paid back for the premium you spent.
Kevin McCormally: The cost of -- extra cost to buying a hybrid is just too much to overcome?
Mark Solheim: That's right.
Kevin McCormally: Are any of the hybrids fuel efficient enough to actually pay back that premium?
Mark Solheim: If you look at the longer term ownership cost of buying the very smallest, most fuel efficient hybrid such as the Toyota Prius and the Honda Civic hybrid, you probably will break even after four or five years.
Kevin McCormally: How bigger role does the tax break for buying a hybrid play in that formula?
Mark Solheim: It plays a very big role, congress change the law so now, when you buy a hybrid you get a tax credit, which is a dollar for dollar reduction in your tax bill when you buy a hybrid vehicle.
Kevin McCormally: But there is a change coming for the Prius and the other Toyota models, correct?
Mark Solheim: That's right. Once a manufacturer sells a certain number then the credit is cut in half. So Toyota is the only manufacturer that actually reached that threshold. So if you buy any Toyota or Lexus vehicle after October, your credit is cut in half.
Kevin McCormally: So you buy before October, you get a 100% credit, after October 50% credit, what about the other manufacturers?
Mark Solheim: None of the other manufacturers have scheduled to expect to reach to that threshold until sometime well into --.
Kevin McCormally: So you will still get the 100% credit for those vehicles?
Mark Solheim: Those vehicles, 100% premium manufacturer.
Kevin McCormally: Thank you, Mark.
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