Do Hybrids Really Make Sense?

[IamIan]

Originally Posted by Hersbird

Honda themselves is the one who said they were selling the Insight in the US for $20,000 at a loss. It was you who came up with a theory with no proof to the contrary.

I'll try to walk you through this again ... repeating briefly bellow several of the 'key' parts of this concept that were described previously ... not no proof ... not contrary to what Honda themselves have claimed.

All of these are known... nothing new .. nothing unproven.

We can go into each in more detail if you like ... but the end result is the same ... Short version ... I1 retail price $18k-$19k turned a profit vs the Manufacturing cost.

1. Itemize Cost Items:
   1. R&D cost money ... but none of that R&D cost is manufacturing cost.
   2. Advertising cost money .. but none of that Advertising cost is manufacturing cost.
   3. Lobbying cost money .. but none of that Lobbying money is manufacturing cost.
   4. etc...etc.
2. Company doesn't Itemize Publicly:
   1. It is well known the Automoible companies do not list each itemized item cost and income... to tell us the public which ones individually did what for performance.
   2. It is well known the companies roll numerous costs and incomes together and give a single net number.
      1. If they add $100 Million in additional advertising ... but that Advertising only produces $10 Million in additional sales ... they do not publicly say they had a $90 Million advertising loss ... instead they roll it into and take that $90 Million loss out of the profits that came from (sales-manufacturing cost)... etc ... repeat for just about all itemized items
      2. When asked is the I1 was sold at a loss .. this is the industry standard mechanism for rolling costs together... Saying the I1 didn't cover all those other non-manufacturing costs that the company usually rolls in ... has nothing to do with weather it did at least achieve a sale price that paid for the manufacture of the item.
   3. Due to corporate tax structure of being able to 'write off' a loss ... It is in the financial best interest of the company as a whole .. always have some 'loss' leader item in order to maximize total net company profit margins.
      1. 10 Item costs and 10 Item incomes may on the whole for a net company still net profits .. but reporting it that way is a tax disadvantage... it is in the companies best financial interest to pile lots of those costs together to force one item .. or one sector .. to at least on paper be operating at a loss ... that loss can than be deducted .. and thus reduce the tax burden for the whole company.
         • This is common practice for ALL large companies .. It reduces their tax costs by billions.
3. Modern Factories manufacture products at very low cost.
   1. Robotic welders , Robotic painters, Assembly lines, bulk material purchases ,.. etc... reduce the labor needed to manufacture a product (like a car) to tiny amounts.
   2. The factory the I1 was manufactured in was itself already paid for before the I1 .. and that factory was already designed/setup to produce Aluminum Frame/Body model vehicles.

[user removed]

TCO for me on the 92 Sentra is 20 cents a mile (8500 miles since 8-14)) and dropping every time I drive it somewhere at 8 cents a mile for gas and insurance. If I drive it another 8500 miles with no major expense then it would drop to 13.8 cents a mile. 150 miles today, 37.1 mpg on winter fuel (around #112 in gas cars a our garage).

Total Cost of Ownership, means I get there for less than you with more cash in my possession, more opportunities for me.

No interest
No depreciation
No property taxes (less than $15)
Much cheaper insurance

I like saving gas almost as much as I like saving money.

regards
mech

[elhigh]

Originally Posted by jamesqf

Well, that explains a lot, as it evidences a tendency to believe hysterical baloney rather than checking out the facts.

You get more mercury living downwind from a coal burning power plant than from a broken CFL in your house.

For the record, LED lamps are only now beginning to achieve similar luminous efficacy to CFLs. They'll get better still but they're not there yet.

[Hersbird]

Brevity is the soul of wit. I don't need long winded theories when big Honda reps tell a major automotive journalism source that they lose money on every car. Not just lose money but roll their eyes lose money. It took Honda 10 years to start making profits on hybrids and there have been years in between where they still say they are losing money on US sales of them (maybe why they cost more in Australia because they chose not to lose money on them there). Overall I'm sure they still have been a net loss if total up over their history so far. Maybe someday they will break even and and then be in the black but at what cost of what they could have been doing with that money over that 20 year period?
Telsa may have it figured out just recently but they are selling them at $80,000 on up, hard not to make a profit on $100,000 cars. Now lets start adding in government grants and stimulus money. How could they not make money?
Tesla is worse than Solyndra: How the U.S. government bungled its investment in the car company and cost taxpayers at least $1 billion.
Benz said nobody in a reasonable time will make money on EVs
Mercedes CEO: No One Will Make Money On Electric Cars In 'Reasonable Time'

[oldtamiyaphile]

Originally Posted by IamIan

Progress:
Thanks for admitting to Australia's penalty of at least a minimum of $16,989 (an 85% Australia penalty) .. That Australia added to the I1 price.

Sorry, no progress. Once you factor in the currency conversion in 2004, of 0.73 that AU$37,950 RSX/Integra becomes US$27,700. That's a 40% penalty, which is much like the typical 30% I guesstimated. I've posted cars that are cheaper here.

Now .. if you would be so kind ... Please site your source .. if you have one ... that it was Honda that did that much ($12,930) of the rest .. and not Australia?

My source is logic. If you tax (and allow for exchange rate) two cars equally, they should increase by the same proportion.

Including currency the RSX was 'taxed' 85% more here than in the US.
Why do you propose then Insight was 'taxed' at a rate of 157%?

There are only three possible explanations.

1. Honda Japan charged Honda Australia more.
2. Honda Australia is responsible for the mark up.
3. Big oil bribed the Australian Customs Service to increase taxes on the Insight alone.

'Australia' can't just penalise an Insight at random or on a whim. There has to be a (legal) mechanism to allow it. Honda on the other hand can do (charge) what they like. No real laws against that.

We already have proven data showing Australia has in other cases imposed a financial penalty on some vehicles by ~300% MSRP.

And I've already explained why it's irrelevant. We have a Luxury car tax. It applied to cars over $57k in 2004, so it didn't affect the Insight at all. The reason Porsche, Ferrari, Lamborghini, Pagani, Rolls-Royce etc are so expensive is in part due to maintaining a dealer network for a marque that might only sell as few as ten units per year, adds a lot to the per-unit price of every vehicle sold.

Insight sold at regular Honda dealers, the same ones that sold the RSX. Both cars were subject to the same taxes, duties etc.

And what about the $18-$19k paid by other markets that didn't impose as much of a penalty as Australia did?

The loss leader/ establishing a technology theory makes sense in bigger markets, Honda may not have seen the benefit of doing that here.

Is it also unprofitable to the Australian who was going to by a $36k car anyway ?? ... By all means ... Tell me what $36k (in Australia) car gets better MPG (driven same conditions) ? .. I don't know of any that do... not even at $36k.

Never said the G1 wasn't economical. If I see one for sale I'll buy it (said this a while back). At $36k you could probably negotiate on a slow selling Leaf, it's more economical

[Hersbird]

Another thing mentioned was in the USA Honda can take the losses they had on the Insight and use it as a deduction on the profits they had on their other cars. That is a deduction on some of the highest corporate tax rates in the world. I have no idea what rules are in place in Australia but isn't it possible that there were no tax advantages in taking a loss their or their corporate tax rates are low enough to preclude the need to try and skate around them? Hence the price the G1 sold at in Australia was the price needed to be profitable. As long as we are just throwing out ideas here.

[IamIan]

Originally Posted by Hersbird

Brevity is the soul of wit.

Never claimed to be witty ... Brevity has never been a strength of mine.

If you think around ~430 words (about ~half a page in a book) to explain a concept .. is 'long winded' ... ... Than you and I ... have VERY different experiences and PoVs.

I don't know if you'd have made it through some of my long winded Professors at all ... I had one professor spend six 1 hour lectures going over just one of the pieces of the concept I described above.

Originally Posted by oldtamiyaphile

There are only three possible explanations.

I'll add a 4th.

No bribe .. but the way the Australian laws , tax structure, etc ... were put together in Australia ... for the Australian Market ... it created a situation that caused the I1 to be thus penalized... Laws and law makers are not Omniscient .. they are not always able to foresee the consequences , loopholes, etc ... that result from the complicated system they produce.

Originally Posted by oldtamiyaphile

Both cars were subject to the same taxes, duties etc.

Do you have proof of that?

Not just conjecture ... wishful thinking etc ... but actual evidence that there was no part of the Australian system ... not just taxes , but any law, etc... that effected the I1 more.

I'm personally applying Oakum's Razor ... Numerous other non-Austalian Markets did not see the I1 priced like it was in Australia ... this is true .. the one variable changed was taking the vehicle to sell in Australia .. without evidence to the contrary .. the simplest explanation is that it is Australia (the thing that changed) that is the cause (intentional or not) in the price difference.

- - - - - -

FYI ... I don't mind continuing to discuss it ... but .. I also don't mind just agreeing to dis-agree either... I don't expect everyone to share my PoV.

[oldtamiyaphile]

Originally Posted by IamIan

I'm personally applying Oakum's Razor ... Numerous other non-Austalian Markets did not see the I1 priced like it was in Australia ... this is true .. the one variable changed was taking the vehicle to sell in Australia .. without evidence to the contrary .. the simplest explanation is that it is Australia (the thing that changed) that is the cause (intentional or not) in the price difference.

I can apply Oakum's Razor too, no other car from a mainstream manufacturer in it's price range was affected to the tune of 150%, you have to go all the way up to an NSX at $250k to get near that (being taxed at a 3x rate accounts for much of that). The nearest example would be the G1 Prius (at just under $40k [ or ~100% - about 50% once the currency is factored in] though a relative bargain), which likewise 'sold at a loss' (whatever definition you apply to that).

If I consider the Australian market in isolation, the variable becomes the car. If the car was indeed unfairly penalised Honda could have appealed for an exemption and the cause would likely have been publicized by the motoring press (which I used to follow religiously at that time).

If the car was caught out by some unintended consequence I can't think of any car prior or since that got caught out do this degree. The G1 wasn't just expensive, it was crazy expensive with a payback into the millions of km vs a standard ECO car.

My perception of the G1 was always that it was a interesting car, but at that price about as relevant as today's VW XL-1.

FYI ... I don't mind continuing to discuss it ... but .. I also don't mind just agreeing to dis-agree either... I don't expect everyone to share my PoV.

I think we might be at that point. Thankyou to all on this thread for remaining civil. I think that shows what a great forum we have here

[IamIan]

Originally Posted by oldtamiyaphile

I think we might be at that point. Thankyou to all on this thread for remaining civil. I think that shows what a great forum we have here

On both counts.

[nimblemotors]

Roadshow: Prius goes 530,000 miles on one battery - San Jose Mercury News

Nuff said?