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You only have 12 days left to take advantage of the federal tax credit for hybrid vehicles! Drop what you’re doing and rush over to your Toyota dealership and order your Prius NOW, before it’s too late!
Baloney! Here’s the real deal…
The federal tax credit that went into effect on January 1, 2006 was limited to the first 60,000 hybrids sold per manufacturer. Toyota (TM:NYSE) breezed through that limit in a brief six months. Since then the credit has been lowered, and is now set to completely expire on October 1, 2007.
This expiration is only for Toyota and Lexus hybrid models. Since no other hybrid manufacturer has come close to the tax credit limit, there are plenty of options for consumers who want that credit.
So will the bottom drop out for Toyota? And if so, who will those crunchy, trendy hybrid buyers run to?
I doubt that Toyota will see a significant drop off in hybrid sales due to the tax credit expiration. Toyota’s name and reputation pack a lot of punch in the hybrid world, and with trouble still harrying the heels of U.S. automakers, it’s likely that Toyota will still be top dog.
But those consumers who do run anywhere, it’ll most likely be to Honda (HMC:NYSE). It’s the only other hybrid producer to come close to Toyota’s fuel mileage performance.
You can see by the chart that both TM and HMC have been in an immediate-term down trend since January 2007. This move has taken the two down to the bottom of their long-term uptrends.
In my opinion, both are ready for a bounce, and could test their previous highs over the next six months. For TM, that’s $138.00, and for HMC, that’s $40.82.
Right now, TM looks a bit more undervalued than HMC, but I think both are headed higher from here. Watch for support at $110 and $32.50 respectively. TM especially needs to find support here, or it could drop back to $100. HMC appears to have already bounced a bit, but now needs to maintain that momentum.
S.R. Nunnally
Editor, Commodities and Resources Report
Taipan Financial News
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