Raymond Richman - Jesse Richman - Howard Richman
Richmans' Trade and Taxes Blog
Honda sets too high a price on its 2013 Civic Natural Gas
For 2013, Honda raised the prices for almost all of its Civic models by $160. The one exception was the Civic Natural Gas which it reduced in price by $160. Its manufacturer's suggested retail price will start at $27,255.
Although this was a step in the right direction, it did not go far enough. Honda only reduced the approximately $6,000 price differential between its gasoline and natural gas models by a measly $320 even though a CNG (Compressed Natural Gas) vehicle costs about the same amount to manufacture as a gasoline vehicle. The vehicles are very similar except that the CNG vehicle requires an expensive fuel tank while the gasoline vehicle requires an expensive catalytic converter.
But, at the present price differential, even if a commuter could save $1,000 per year by buying less expensive CNG instead of gasoline, it would still take more than 5 years to recoup the huge difference in purchase price.
Last year, Honda made the Civic Natural Gas available at dealerships countrywide. If, this year, it had reduced its natural gas model's price significantly, there would have been a huge increase in the size of a the CNG car market which Honda currently monopolizes. More CNG filling stations would spring up and the American economy would benefit from the substitution of domestically-produced natural gas for imported oil.
Fortunately for America, other companies are moving much more aggressively than Honda to take advantage of CNG's potential growth. For example, in July GE announced that in a about two years they will market a reasonably priced home filling station for natural gas vehicles. Specifically:
Hopefully, when GE's home fueling station becomes available, either a more aggressive automobile company will enter the CNG car market or Honda will discover that it can price its CNG model low enough to take advantage of the market's potential growth. Until then, the growth in CNG usage will come almost entirely from trucks and buses.
Comment by Ron Wagner, 11/31/2012:
The only choice for a low income buyer is a used CNG vehicle, or a conversion of a low priced vehicle. There are converters who have reasonable prices.
Please see the conversion page on my free blog. It is near the front of my natural gas stories:
Response to this comment by Howard Richman, 11/31/2012:
Journal of Economic Literature:
Atlantic Economic Journal: