How effective are efficiency-focused incentives?
For the 18th straight month the Toyota Prius has led Japanese auto sales, thanks to government subsidies and tax credits. However, the last two months have seen declines in Prius sales, as subsidies have ended, although tax credits still exist.
So, do government incentives work in the auto industry?
The easy answer to that question seems to be yes. It's not just the Prius that leads sales, but also the Honda Fit and a few other hybrid cars, although fuel efficient vehicles have always been much more popular in Japan than in the US thanks to significantly higher gasoline prices. Still, it did take incentives to push the Prius to the top of the sale's list. And more rough sailing is ahead.
While tax incentives are still available, the loss of subsidies resulted in a 20 percent decline in Prius sales last month. How much further will this decline dip once tax incentives expire?
I don't know, but the real question seems to be, are today's hybrid and plug-in tax credits capable of pushing a hybrid or plug-in vehicle to the top of the US sale's list?