(5/14/09) Note: This article was originally published in February of 2006, well before any tests of the Tahoe Hybrid or Honda Insight — the Fit-based hybrid mentioned in the story — could be conducted. There are some inaccuracies — the Insight came in substantially higher than $12,000, for example. However, the math still holds up.

Honda recently announced in Japan that it will offer a low-priced hybrid version of the itty-bitty Fit, the subcompact it recently unveiled at the Detroit auto show for U.S. sale this Spring. It will be the lowest priced hybrid available in Japan (around $12,000), and from the sound of it, will be the most fuel-efficient car pretty much anywhere.

I’m a fan of hybrids, unlike a lot of my colleagues. I’m not some tree-hugging, SUV-burning wacko about it, but I think the technology is cool, and that hybrids are as much a statement about who a person is as is, say, a Corvette. Never mind that the EPA numbers are usually a fantasy. For all practical purposes, so is a Corvette’s 170-plus mph top speed. Both are achievable in the right circumstances, but it’s unlikely that owners will ever do so.

But the Fit hybrid got me to thinking about the whole idea of hybrids and their larger impact. The Fit is already a very fuel-efficient car, with combined mileage in the 35-mpg range, depending on transmission choice. Let’s assume that the Fit hybrid will have a real-world 25-percent improvement in fuel efficiency, which is roughly on par with the Civic hybrid versus its non-hybrid cousin. With that in mind, the Fit hybrid will get mileage in the 44-mpg range. That’s pretty good by any measure.

(By the way, has anybody else notice the minute fuel efficiency improvement of the Fit versus the Civic? The Fit’s 33 mpg in the city is only 3 mpg than the Civic’s, and the highway numbers are the same.)

With this in mind, let’s talk about GM for a minute. While unveiling its new Tahoe, Yukon and other GMT900-based vehicles, it also showed off a new hybrid version. Called “Dual Mode,” it promises a 25-percent improvement in mileage. While GM hasn’t said exactly what is being improved by 25 percent, we’ll assume it’s the base 5.3-liter V-8, which gets combined mileage in the 19-mpg range. If we take GM at its word, this means the hybrid would get somewhere in the neighborhood of 24 mpg combined. Not great, especially compared to the Fit, but pretty good for a big honkin’ SUV.

General Motors has had a different outlook on hybrids than its Japanese competitors, and has long said that the technology is better suited to trucks and other large vehicles because they can better handle the extra weight and whatnot of the hybrid system. And this isn’t just GM making stuff up; the company has a lot of experience in building hybrid buses, which are sort of an extreme example of the concept.

After running a few numbers, I think that GM is on to something. A 25 percent improvement in a gas hog is worth more to the consumer than a 25 percent improvement in a car that is already pretty fuel-efficient. It all has to do with the point of diminishing returns when it comes to fuel economy. What that means is, the more efficient a car is to begin with, the less you get out of a certain percentage improvement.

Without getting too mathy on everyone, let’s just use some examples based on our projections above. Over the course of 12,000 miles, our theoretical Fit hybrid owner will buy about 69 fewer gallons of gas than the owner of a standard Fit. The Tahoe hybrid buyer, however, will buy nearly 128 fewer gallons than the regular Tahoe owner. Over the course of five years, the truck owner will save more than 630 gallons versus about 340 gallons for the Fit owner.

Now, if you’re down in the comments box getting ready to tell me that my fictional Tahoe hybrid’s fuel economy is still 20 mpg less than the the nonexistent Fit hybrid, I know that. So stop writing and keep reading. Obviously, the Tahoe driver is still going to be spending nearly twice as much for gas as the Fit owner.

But consider this. GM sells more than a million vehicles based on its truck platform each year. Even if only 5 percent of those were hybrids (let’s say 50,000 to keep the math easy), the total fuel savings for all the drivers would be somewhere in the neighborhood of 6.3 million gallons of gas saved. By contrast, Honda expects to sell just about 30,000 Fits, hybrid or not. But just assuming similar numbers (highly unlikely, but let’s just pretend), a fleet of 50,000 Fit hybrids would save the U.S. about 3.4 million gallons of gas.

Now, admittedly, I am making a few assumptions here. I’m not factoring in the price premium for hybrids, but like I said, I don’t really think people pay that premium thinking they’ll get it back in fuel savings anyhow; that’s why I’m not even bothering with the monetary difference (although it’s proportionally the same). I’m also not breaking SUV sales out from pickup sales, but GM has said that the hybrid system will be available in pickups by the 2008 model year. Regardless, GM hasn’t announced how many hybrid trucks and SUVs it plans to build. And there’s no way that Honda will sell 50,000 Fits in a year in the U.S., regardless of powertrain choice.

But that’s sort of the point, isn’t it? Total subcompact sales are a fraction of full-size truck and SUV sales. Hell, everything is a fraction of full-size truck and SUV sales. If GM managed to move just 50,000 hybrid trucks—less than five-percent of total production for the platform—that would be 6 million fewer gallons of gas that we’d have to refine, and consequently that much less oil we’d have to buy from you-know-who.

Make fun all you want of GM, but on this one, I think the big guy is right. Hybrid drivetrains do a lot more good in vehicles that are already popular (big trucks and SUVs) that have lousy mileage to begin with than smaller cars that don’t sell well and already get good mileage. If GM can keep the price reasonable, keep the production numbers up, and make good on its efficiency promise, hybrid GMT900s will be good for everyone.

Even Fit owners.