That policy may have made the MKZ Hybrid a bargain but it did so at the higher price of the gasoline-powered MKZ. Ford (or any other automaker) would not have lowered the price of the Hybrid model to the price of the gasoline-powered model, but rather found a nice compromise price: raise the price of the gasoline-powered model so that it subsidizes the lower the price of the hybrid model.

That may work for a luxury brand but would not work for a mass-market brand. I highly doubt that (North American) buyers of the Corolla, for example, would be willing to pay a higher price so that it would subsidize the lower price of a Corolla Hybrid; Toyota would lose sales of all Corolla models, perhaps to the point that the Corolla becomes irrelevant. Toyota cannot afford to do that when the Civic and Mazda3 sell so well in North America.

The lease on my ESh comes due in the new year. I have not yet decided whether to turn it in and get a Camry Hybrid or buy it out and wait a few months for the introduction of the new ESh.

 

So he test drove a 2017 new Prius today (Four Touring, MSRP ~$33k), 2017 new Avalon Hybrid (MSRP $41k) and heavily favored the Avalon Hybrid. ES300H is next on his list; though he will likely wait to check out the new Camry Hybrid....and I suspect the Avalon redesign is around the corner as well? He'll check out the Kia Niro as well, maybe he'll be surprised. Looked briefly at a CMAX (outdated, funny looking....) as well.

 

So, how does your friend like the new Prius?

New Avalon and ES models typically follow a year after a new Camry model. We know that the new Camry is coming on sale soon, as a 2018 model, and we have not yet seen the new Avalon and ES, so I would think that Toyota will introduce new Avalon and ES models a year later, for 2019.

I myself may wait. The lease on my ES Hybrid expires in the new year and I do not know yet if I should turn in the ES and get the new Camry or buy out the ES and wait for the new 2019 model.

 

I know what you ae trying to say here, but, respectfully, I don't quite agree with it. If Lincoln jacked the price of the gas-powered MKZ to "subsidize" the hybrid version, I don't think the gas-powered ones would sell well....customers would think they were overpriced (in fact, they aren't selling well, but that is due to other reasons.....primarily, the growth of SUVs).

 

Ford, like any other automaker, is a business, and the goal of a business is to make money, not to give away product at a loss.

If Ford simply reduced the price of the Hybrid without raising prices on other trim lines or options of the MKZ to cover the higher costs of the Hybrid (considering the extra costs of the second, electric powertrain) not covered by the lower sales price, Ford would lose money on the MKZ model as a whole.

Using other trim lines or options to cover the costs of a low-priced model is not new in the auto business; the low-priced model (perhaps selling at a loss) is known as the loss leader. This type of pricing model is much more easily done in the luxury car business where higher prices are the norm and where it becomes much easier to hide high-priced trim lines or options.