Hybrid Tax-Credit Cap Impacts Foreign Automakers

Washington DC February 12, 2007: The AIADA newsletter reported that last April, President Bush said he favored removing limits on the number of advanced-technology vehicles eligible for federal tax credits. But the budget he proposed last week would not lift those caps.

Under current law, once an automaker sells 60,000 qualifying vehicles - mostly gasoline-electric hybrids - a phase-out of credits begins for that company's products.

Automotive News reports that Toyota's customers already are affected by a tax credit phase-out for alternative vehicles, but the company is taking a wait-and-see attitude toward the president's budget plan.

Ed Cohen, vice president of government and industry relations for Honda North America Inc., said his company isn't sure whether hybrid purchases even need government incentives. But if they continue, he said, they should have an expiration date.

Honda expects to hit the 60,000 limit in the second half of 2007. Ford Motor Co. has sold just 20,000 qualifying hybrids and did not respond to a request for comment on the Bush budget.