US consumers seeking shelter from high petrol prices might not find the relief they expect by turning to hybrids, according to buyers guide Edmunds.com.
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“The combination of increasingly higher gas prices and a greater variety of hybrids in the marketplace has made many consumers seriously consider a hybrid as their next vehicle,” said Edmunds’ consumer editor Phil Reed.
“While some people buy hybrid cars because they appreciate the environmental benefits and enjoy using advanced technology, consumers looking at hybrids solely to save money at the gas pump need to carefully research the cost of actually owning and operating a hybrid.”
Consumers who own a hybrid car or SUV may purchase less petrol and have lower maintenance expenses than if they owned the non-hybrid counterpart, and may qualify for a federal tax credit designated for hybrid vehicle owners.
However, most hybrids’ high sales prices, insurance costs and related expenses will offset the savings. Edmunds found that during the first five years of ownership, a hybrid can cost as much as $US5,283 more than its non-hybrid counterpart.
Only when the analysts compared the Toyota Prius to the Toyota Camry LE [there is no non-hybrid Prius] did the hybrid ownership experience prove financially advantageous – but barely. Over the first five years of ownership, the Camry is expected to cost just $81 more than the Prius.
However, when comparing the costs of the other vehicles, the analysts determined that petrol would have to cost at least $5.60 per gallon for hybrid drivers to break even if they drove 15,000 miles per year over the five years. Alternately, they could break even if they drove at least 37,000 miles per year at the current average petrol price of $2.28 per gallon.
The analysts predict this cost differential is likely to decrease as the technology matures and hybrids become more mainstream. Currently, hybrids make up less than 1% of market share. Accordingly, the manufacturers have not yet been able to achieve economies of scale and are passing the higher costs along to their buyers. Since current customer demand greatly exceeds supply, the vehicles are easily able to carry the premium transaction price. At some point in the near future, these dynamics are expected to change.
Other factors may level the playing field even sooner. For example, President Bush made a speech on May 17 in which he stated that his proposed 2006 budget includes a substantial increase in the hybrid tax credit.
“Anyone shopping for a vehicle, especially one very different from his or her current car or truck, should do research to avoid being surprised by the ownership costs,” said Reed. “In general, no more than 20% of a household budget should be designated to cover automotive expenses.”
