Hybrid prices falls to the kerb

Honda's Graeme Seymour says its price will be key. Photo / Doug Sherring

Honda plans to shake up the market for environmentally friendly hybrid cars by selling its new petrol/electric Insight at the same price as traditional vehicles.

Until now, hybrids have sold at a significant premium over their petrol-only cousins. That has kept their share of the New Zealand car market at around 2-3 per cent.

But when the 2011 Insight makes its debut later this year it will be at a normal car price, Honda New Zealand managing director Graeme Seymour says.

The Toyota Prius has so far dominated the world market for hybrids but Honda plans to give it a run for its money.

"Toyota will react to whatever we do," Seymour predicted.

Honda is pinning many of its hopes for future sales growth on hybrids. Last year was the auto maker's worst since 1962 - it sold fewer than 3000 vehicles in New Zealand, down from 6000 in 2007.

Concerns over rising oil prices and carbon dioxide emissions continued, and green motoring solutions, such as battery or fuel cell technology, were still a long way off, Seymour said.

"But we can offer affordable hybrids that can knock out 40 to 50 per cent of CO2."

The key was making hybrids price-competitive. To date buying a petrol/electric vehicle "hasn't been a rational choice, it's been an emotive, green choice", said Seymour. The marketing strategy for the Prius had been "look at me, I'm green. When every car is like this that kind of strategy doesn't work."

Offering the Insight at the same price as equivalent petrol cars was an international strategy for Honda. It was able to do so because of volume sales.

Toyota New Zealand chief executive Alistair Davis said hybrids carried a cost premium upfront because the motorist was effectively buying two motors, more batteries and other technology.

But they benefited from vastly reduced operating costs. "It's just changed the formula for how you're buying your motoring."

He said the Insight had not sold well in some overseas markets. "If they are bringing Insight in at a greatly reduced price they're either doing that because they've cut their costs or because they're desperate to sell it," he said.

"I'd have to weigh up how much impact Insight was having on us as to whether or not I was going to chase after them in terms of price."

Car salesman Stephen Pollard, owner of The Clean Green Car Company, said the Insight did not have the same reputation as the Prius as it did not offer the same fuel savings.

But he applauded any move to bring down the price of hybrids. New Zealand was a different market from the rest of the world.

While Kiwis liked to portray themselves as clean and green there was almost a backlash against cars with environmental credentials.

"In other countries it's an aspirational vehicle but here people think you're some sort of weirdo if you drive one."