Toyota's Green SUV

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Even with the price of regular gasoline averaging $2.90 per gallon, buying a hybrid vehicle is a judgment call. Paying the premium price hybrids command over equivalent conventional models is a good way to make an environmental statement. But it may not make sense financially unless you do a lot of city driving, plan to keep the car a long time to amortize the extra cost, and expect gas prices to rise a lot higher.



On the other hand, there's never been a better time to buy a hybrid if you really want one. Congress currently plans to phase out the federal tax incentive for buying a hybrid under a complicated system that will cut the $1,550 to $3,150 tax break on Toyota hybrids in half after Sept. 30, and down to zero starting next April. But states such as Colorado and West Virginia now offer big tax breaks on hybrids, too. The new models hitting the market, meanwhile, are bigger and more versatile than compacts such as the Toyota (TM) Prius and Honda (HMC) Civic that have dominated sales in the past, making hybrid ownership far more practical for families and active weekenders. Plus, the proliferation of models and rising competition mean that availability is better and prices on some models are actually coming down a bit.



LOTS OF STORAGE.

The Toyota Highlander hybrid is a case in point. It's the first hybrid with three rows of seats, making it practical for suburban carpoolers. The added row of seats gives the Highlander a maximum seating capacity of seven, vs. five for other new models such as the hybrid versions of the Honda Accord and Toyota Camry sedans, and hybrid SUVs such as the Ford (F) Escape [see BW Online, 04/21/06, "Fuel Economy Winners and Losers"] and Lexus RX 400h [see BW Online, 03/08/06, "Hybrid Heaven in a Lexus"]. Just keep in mind that the Highlander's third row of seats is too cramped for most adults. A more realistic maximum seating capacity is two adults and five kids, or four adults with two smaller kids in the third row.



The Highlander hybrid is also much more than just an efficient people hauler. Its 268-horsepower V6 engine [augmented by front and rear electrical engines] delivers 212 ft. lbs. of torque, making it quite quick for a family SUV. In fact, it's considerably more powerful than the 215-horsepower V6 in the conventional Highlander. Plus, the Highlander hybrid comes with optional four-wheel drive, has an enormous 81 cubic feet of storage room with both sets of rear seats folded down, and has respectable maximum towing capacity of 3,500 lbs., the weight of a good-sized trailer. So, it's an excellent vehicle for camping, weekend ski jaunts, and other outdoor activities.



Like the smaller Toyota Rav 4[see BW Online, 03/15/06, "Toyota's Prince of Practicality"], which doesn't come in a hybrid version, the Highlander's steering isn't especially tight or precise so despite its quickness it's more functional than fun to drive. Also like the RAV 4, the Highlander's interior is clean and well-put-together, with 10 cup holders, lots of storage bins for toys and magazines, and an optional $1,700 rear-seat entertainment center to keep the kids occupied.



The front and second-row seats have a surprising amount of leg room: I'm 5 foot, 10 in., and with the front seats adjusted comfortably for me I still had plenty of extra knee space in the second row of seats. With the third row of seats in use, though, there's virtually no luggage space in back, so the Highlander isn't practical for taking a large crew on long trips.



LOW-INTEREST LOANS.

In contrast to the wildly popular Prius, you also can actually get your hands on a Highlander hybrid fairly quickly. The Prius remains very hard to find: Toyota says there were only 808 Priuses on its 1,200 U.S. dealers' lots at last count, a mere 2.7 day supply. But there's an ample 55.5-day supply of Highlanders on the lots nationwide. Toyota's U.S. sales of the Highlander hybrid, which was introduced last summer, totaled 11,649 in the first four months of this year, putting the company on track to easily meet its goal of selling 30,000 units for the full year [vs. expected Prius sales of 108,000 for the year].



The bad news is that the Highlander is pretty pricey -- and will get a lot pricier if the $2,600 federal tax credit it's eligible for is phased out as planned. The base model starts at $33,635 with two-wheel drive and $35,035 with all-wheel drive, while the fancier Limited version with leather seats and wood-grain interior trim starts at $38,495, with two-wheel drive, and $39,895, with all-wheel drive.



Either way, you're paying a lot more than you would for a Ford Escape hybrid and its Mercury Mariner sister model, which in their four-wheel-drive versions start out at $29,140 and $29,840, respectively. [The Escape and Mariner are eligible for tax credits of $1,950 to $2,600, and the company says that under the government's phase-out plan the full credit on both models seems likely to remain in place through 2007.]



The average real-life selling price of Highlander hybrids has fallen about $1,000 since the beginning of the year, to about $36,663 in April, according to the Power Information Network. That's because slowing sales forced Ford to offer cash and other incentives on the Escape and Mariner hybrids, and Toyota responded with a cheap lease deal and low-interest loans on the Highlander. But that's still a lot more than the average real-life price of the Escape [$29,735], Mariner [$31,285], and Honda Accord [$29,754]. According to the Power Information Network, it's also a very hefty $8,350 premium over what people are paying on average for a conventionally powered Highlander right now.



TOUGH DECISION.

Like most Toyotas, the Highlander comes with lots of standard safety features at that price, including front and second-seat side curtain airbags, antilock brakes, and stability and traction control. The main available options are the rear-seat entertainment system and a $1,700 sunroof package that also includes an upgraded six-CD sound system, fog lights, a spoiler, and steering-wheel mounted controls. The other major option, a $2,000 navigation system, is only available on the Limited edition.



Personally, I'd recommend that people with kids or an active lifestyle go with the cheaper base model Highlander. The cloth seats look good and are easy to wash with soap and water, and the faux wood trim in the Limited looks kind of tacky to me.



I'd also recommend thinking hard before paying an extra six or eight grand [depending on your tax credit] for the hybrid version of the Highlander. On the plus side, hybrid batteries are proving more reliable than many buyers expected, so you're unlikely to have to spend a ton of money replacing them if you keep the car for a long time. The batteries in the Highlander are warranted for eight years or 100,000 miles. In theory, it would cost about $2,500 to replace them, but the company says that none of the batteries in high mileage older Priuses has yet had to be replaced. In some cases, the company says, single battery cells have gone out, but they're far less expensive to replace.



However, the hybrid Highlander's fuel-efficiency advantage over a conventional model isn't all that great. My all-wheel-drive test Highlander was rated to get 31 mpg in the city and 27 on the highway, and in a stretch of 202 miles of mixed driving I got 29.8 mpg. That's decent mileage, but unless gas prices rise a lot it would take an awful lot of driving to earn back the extra money the hybrid costs, especially vs. the [admittedly much pokier] conventionally powered Highlander with a four-cylinder engine that's rated to get 22 mpg in the city and 27 on the highway. The bottom line on the Highlander, as far as I'm concerned, is that you have to really want one [or live in a state like Colorado or West Virginia] to justify the added expense.



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