$2 Gas Could Crush Toyota U.S. Sales

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By Douglas A. McIntyre Published
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Makers of hybrid and electric cars never saw $2 gasoline prices coming. They believed they would operate in a world in which gas prices hovered close to $4 and the cost to fill up a car could be higher than $50. Americans would need these cars to keep within what are often strict household budgets. That has changed in a matter of six months, and gas prices could stay low. Some of the most popular cars in America could see sales erode considerably.

Toyota Motor Corp. (NYSE: TM) will sustain the most damage. Among the best-selling hybrids are the most popular one in the world and one of the oldest. The Prius is so popular it has spread its brand across a number of models to cater to a broad array of tastes and pocketbooks. There are four versions of the Prius, one of which is a plug-in, to target the growing demand for electric engines. The highway MPG for the balance of the line Prius runs about 50. Toyota also makes hybrid models of its extremely popular Avalon and Camry. Its RAV4 and Highlander SUVs have hybrid engines as well.

So as not to be entirely bested by Toyota, South Korean brands Hyundai and Kia have hybrid versions of their Kia Optima and Hyundai Sonata. Each is toward the low end of pricing in the car industry. Honda Motor Co. Ltd. (NYSE: HMC) operates there as well. Its popular Accord and Civic have hybrid models.

As for the balance of the industry, Ford Motor Co. (NYSE: F) and General Motors Co. (NYSE: GM) have hybrid models of most of their popular cars. GM in particular stands out because of the failure of its heavily publicized Volt. At the highest and most expensive end of the industry, BMW and Mercedes have launched hybrid versions of their cars. Even deeply troubled Cadillac offers an expensive hybrid, the ELR. Its sales are almost certainly modest because the car carries a sticker of $75,000 to $82,000.

All of the major car brands sold in America offer hybrid models, the sales of which are bound to falter. But Toyota’s large fleet of hybrids has the most exposure in a world of $2 a gallon gasoline.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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