Ford hybrid tax credit slashed in half -- the price of success

A few years ago, to encourage Americans to buy more fuel-efficent, low-emission vehicles, Congress approved giving a nice tax credit to anyone who bought a hybrid vehicle.

Ford has done particularly well at selling its hybrids -- a little too well, in fact. So if you want the very fuel-efficient 2010 Ford Fusion hybrid or 2010 Mercury Milan hybrid AND the full credit of $3,400 on your taxes, you've got to buy one by March 31.

After that, the credit is slashed in half.

According to the IRS, Ford has sold 66,000 of its hybrids -- mostly the less efficient Ford Escape and Mercury Mariner SUVs -- while GM has sold half that. The law that created the tax credit presumes that any carmaker selling more than 60,000 hybrids no longer needs a tax credit to persuade buyers to purchase one.

Since Ford hit that mark in the last quarter, the credit will now begin being phased out, just as the Fusion is due to hit the market.

"After March 31, the tax credits will drop from $3,400 to $1,700," the Cleveland Plain-Dealer reported. "In the fourth quarter of 2009, it will drop an additional 25 percent, and there will be no tax credit after March 31, 2010."

But the problem with the phase-out, notes the Los Angeles Times, "is that these miraculous testaments to American ingenuity aren't due to hit dealership lots until right around the time that tax credit expires, March 31, or perhaps slightly after that date. That means that environmentally conscious consumers, tempted by the sharp looks and gas-sipping ways of the new mid-sized sedans, will find themselves in the frustrating position of reaching out for that $3,400 tax credit, only to find that it's dropped to $1,700. Hocus-pocus."

[2010 Ford Fusion from Ford website]

--Craig Pittman

Comments

[Mark]

I was willing to buy one with a $3,400 credit, which leveled it against current offers such as Nissan Altima Hybrid, but as you said its a bit of false advertising, since virtually no one will qualify for that amount. If the Feds want people to buy they should "extend" the credit at least in this case since there has been no actual vehicle available for purchase during Q1 when this credit was available.

[Peter]

I just purchased a Fusion Hybrid this afternoon after learning about the $3400 tax credit last Saturday. This involved going to four dealers, getting low-balled on my trade-in by one, being asked to pay $5000 over MSRP by the next, walking out on a third wishy-washy dealer after being asked to wait for 2 hours while they weighed my offer. I finally bought from the fourth dealer who sold at MSRP (but not below) and who met my trade-in demands. Vehicle to be delivered in three or four weeks which is fine with me. I got a good deal, but by paying MSRP not a great deal. But I'm happy and I'm getting a $3400 tax credit!

[Dan]

I had similar frustration as Peter in trying to buy an Escape Hybrid.
I found a great solution. If you own ANY Ford Stock (or just buy some for $2.5 a share), you can email Investor relations and get an X-Plan Pin #. It took me a day to get one and I was able to save $2300 off MSRP on my deal.

[Jordan]

This is truly a remarkable car. Too bad all the credits are being used up like the prius.

The average number of days the Fusion sits on the lot sits at 80 (better than average for good deals). That means dealers will lower price to move the vehicle.

Check out the video: http://excarsalesman.typepad.com/cars/ford-fusion/