Fuel-efficient hybrid cars will soon symbolize a better life

It was inevitable. With all-time-high gas prices driving the demand for gas-electric hybrid cars into overdrive, prices for fuel-efficient hybrids were bound to take off. The Wall Street Journal reports that with a backlog of more than 22,000 orders for Toyota's Prius, the car is now fetching a dealer markup of $5,000 over its original sticker price of between $20,000 and $26,000. Some dealers are auctioning off spots on their waiting lists for $500 or more on eBay, and one customer even resorted to ebay to pay more than $32,000 for his new Prius when his local dealer couldn't deliver even after a six-month wait. Despite the price gouging, most buyers appear all too happy to get a hybrid car — any hybrid car — regardless of color, options or an opportunity to test drive it.

Hybrid cars combine gas engines with battery-powered electric motors to achieve, in some cases, 60 miles per gallon. Their batteries are recharged as drivers brake, and contrary to popular belief, they never have to be plugged in. To date, only Toyota and Honda offer hybrid cars, but Ford and Lexus are scheduled to launch the first hybrid sports utility vehicles later this year, which are expected to achieve around 35 miles per gallon.

The markups for hybrids are amazing given that most other conventional cars, particularly large SUVs, have had to rely on sizable rebates, discounts and no-interest loans to encourage sales. Indeed, the average incentive package per vehicle now exceeds $5,000! As the price gap between hybrid and conventional cars widens, however, some analysts are saying hybrid cars aren't worth it. Indeed, for the typical driver, hybrids will save only a few hundred dollars a year on gas. Given that hybrids currently can command $5,000 to $10,000 more than comparably equipped conventional cars, it could take years — perhaps beyond the practical life of the car — to reap any cost savings. But does this mean buying hybrids is foolish? Hardly! Consumers rarely purchase cars on fuel economy alone. Status and utility are more important factors, and hybrids offer other advantages, both practical and symbolic, that increasingly will pique the interest of mainstream drivers. Here are a few of them:

Performance — While early hybrid engine systems lacked the power of conventional engines, technology is advancing. The forthcoming Lexus RX-400h SUV, based on the existing RX-330, couples a V-6 engine with an electric propulsion system, giving it the power of a V-8 and improved acceleration over the already impressive RX-330. The Lexus hybrid is clearly designed for high-performance drivers.