Hybrids: Save Gas, Lose money

Widdletink · 03-17-2006, 01:28 AM

Hi All,

Again, I found this on AOL money and copied it for those who could not access it directly. Unfortunately, the writer used the Consumer Reports discredited article as the basis for his article. Bummer, that he did not do the research to find out that their numbers were fatally flawed. This article (in Consumer Reports) is probably going to haunt us for months if not years.

Take care all,

Tisza

Updated:2006-03-15 09:45:19
Hybrids: Save gas, lose money
Consumer Reports says hybrid cars will lose value faster than other cars. Are they right?
By PETER VALDES-DAPENA, CNNMONEY STAFF WRITER

NEW YORK (CNNMoney.com) - Buying a hybrid will save you money on gas...but you might still come out behind.

One of two main reasons, according to a recent analysis by Consumer Reports, is an additional cost that has typically been treated as an unknown: depreciation. Another factor, the report found, is purchase price -- hybrids simply have higher sticker prices than their non-hybrid counterparts, and gas savings don't do nearly enough to close the gap.

According to Consumer Reports' analysis of six hybrid gasoline/electric vehicles, they will lose 2 percent to 3 percent more in value over five years of ownership than otherwise identical non-hybrid vehicles.

With the purchase price difference, depreciation and other costs like financing and insurance factored in, only the Toyota Prius and Honda Civic Hybrid would save owners any money -- $406 and $317, respectively, over 5 years. That final figure includes the impact of a federal tax incentives for hybrids. Without those incentives, Prius buyers face a net cost of ownership of $2,700 more than Corolla buyers.

Other hybrid vehicles would cost owners thousands more than non-hybrids over five years of ownership, even after federal tax credits.

For example, a Toyota Highlander Hybrid costs $7,185 more to purchase than the non-hybrid version. That results in $558 more in sales tax and $2,653 more in financing costs. It also will cost $358 more to insure for five years and $12 more in repair and maintenance costs. In addition, the hybrid will also lose 3.9 percent more in value than the non-hybrid.

The Highlander Hybrid will save you about $1,392 in gasoline over that time. So, even with a $2,200 federal tax credit in your bank account, the Highlander Hybrid will ultimately cost you $5,508 more after five years than a similarly-equipped non-hybrid Highlander.

Figures originally published in Consumer Reports magazine on March 1 showed the cost gap being much larger and none of the hybrid vehicles saving owners any money. A correction posted to the magazine's Website Wednesday morning adjusted for a miscalculation in the rate of depreciation. The corrected figures narrow the gap, but all the hybrid vehices still depreciate at a faster rate than non-hybrids, according to the magazine.

Depreciation debate
Depreciation is a major factor in Consumer Reports' analysis. But, experts say, it's difficult to accurately predict depreciation since few mainstream-targeted hybrid vehicles have entered the used car market.

Hybrid supporter and Prius owner James Bell, publisher of the automotive guide IntelliChoice, recently sold his two-year-old Prius for just $4,000 less than he originally paid for it -- a remarkably low rate of depreciation

Even Bell acknowledges, however, his experience isn't a perfect indicator. Unlike most hybrids, the Prius is a uniquely designed vehicle that exists only as a hybrid. There are still waiting lists for new Priuses at dealerships, so some impatient buyers will look for used ones instead.

And even for the Prius, some experts are saying that, because of hybrid cars' technical complexity and additional costs, used car buyers will become wary of them in years to come.

Still, Bell thinks hybrid cars will hold their value at least as well as, if not better than, regular, non-hybrid vehicles. "We don't see any reason at this point to think that a hybrid is going to track along as an outstanding value and then suddenly crash," he said. In spite of increased production, hybrid systems will likely remain rare enough to command a premium among used car buyers, Bell said.

Nonetheless, there may be more effective ways to save on gas than buying a hybrid. Buying a smaller car, for example, or just getting a smaller engine. "Hybrids are kind of a luxury item," points out Jeff Bliskell, who wrote the feature for Consumer Reports.

Some luxury items that provide a tangible benefit, like heated seats, generally add to a vehicle's resale value. Whether a hybrid powertrain provides a real benefit, and will add to the car's value, will depend on a potential buyer's feelings about the social and environmental impact of fuel consumption.

Raj Sunderam, president of Automotive Lease Guide, a company that predicts residual values of cars for the purpose of calculating lease terms, also sees hybrid cars possibly losing value faster than non-hybrids.

"We would agree with Consumer Reports that this is an area of caution," he said.

But among the unknowns, Sunderam said, is long-term durability. "There's no track record of how they hold up after 80,000 or 100,000 miles," said Sunderam.

As the number of hybrid vehicles available increases, that could also drive used hybrid prices lower. But it could also increase familiarity with the systems and ease potential used car buyers concerns about getting the car serviced, said Sunderam.

Still, said Sunderam, given the issues surrounding hybrid vehicles, the prudent course is to assume they will lose value faster than non-hybrid cars. It will be up to future used car buyers to prove that assumption wrong.

2006-03-09 09:39:55

V8Cobrakid · 03-17-2006, 02:14 AM

Thanks for the article. Unfortunetly i was bummed when i heard the compairison to the corolla. I think these companies need follow up emails.

Cameron · 03-17-2006, 12:24 PM

Quote:

Originally posted by Widdletink@Mar 17 2006, 01:28 AM
...Raj Sunderam, president of Automotive Lease Guide, a company that predicts residual values of cars for the purpose of calculating lease terms, also sees hybrid cars possibly losing value faster than non-hybrids.
"We would agree with Consumer Reports that this is an area of caution," he said.
But among the unknowns, Sunderam said, is long-term durability. "There's no track record of how they hold up after 80,000 or 100,000 miles," said Sunderam.

[snapback]225775[/snapback]

Does this necessarly mean the Pius will depreciate greater than a "standard" auto. The first part of the quote states that Raj agrees with "others" that the Prius may lose values faster than non-hybrids. But it seems to me if he were asked, he may also agree with "others" that the Prius may deperciate less than non-hybrids. It really depends on how the question is asked and how one interpets the answer. Also, isn't there a "track record" established. Wasn't the Prius voted the most dependable auto on the road for 2005?

doubina · 03-17-2006, 06:26 PM

I suggest that no one pay attention to any of these articles. None of the people involved in writing them have any engineering or automotive manufacturing experience to REALLY know what they are talking about. Take my advice, buy a prius, it’s a great car! Also, before you buy, go rent one for a day or two. Hertz has them for rent, and so do most Toyota dealerships. It really helped me in making my decision. Only you know if the features in the prius benefit you, not some clown trying to make a buck by writing a stupid article. :P

Cameron · 03-18-2006, 12:21 AM

I sat in one once. Not moving. I ordered mine a week later and am now waiting...waiting....

Begreen · 03-18-2006, 02:15 PM

Quote:

Originally posted by Cameron@Mar 17 2006, 10:21 PM
I sat in one once. Not moving. I ordered mine a week later and am now waiting...waiting....

[snapback]226330[/snapback]

Cameron, did you contact Gladstone Toyota of Portland? (1-866-861-0606) If not, give Travis a call and tell him Will from Vashon,WA sent you. They have been doing a good job of having models available. Got mine in less than a week. He picked me up at the airport and had everything ready to go. It was a very easy transaction. The car was well prepped and ready to go. That was after getting the weeks/months to go spiel from several local dealers.

p21usa · 03-20-2006, 11:21 PM

Don't know if this was already posted but CR admitted an error in their calculations re: the Civic and Prius and now say that these two models actually show a SAVINGS! Ha Ha! CR messes up all the time. I was thrilled to send the article to all my "friends" who were razzing me after the original review came out.

"Important update: This is a revised report on "The dollars and sense of hybrids"

“The dollars & sense of hybrids” posted on ConsumerReports.org is a revised version of the report printed in the April issue of Consumer Reports magazine.

The report has been revised because a calculation error involving projections for depreciation in the original, printed version led us to overstate how much extra money six hybrids will cost owners during the first five years, compared with owning similar all-gas models.

Our revised data show that if buyers are able to take advantage of limited federal tax credits, two hybrids--the Toyota Prius and the Honda Civic Hybrid--are projected to cost about $400 and $300 less, respectively. The other four--the Ford Escape Hybrid, Honda Accord Hybrid, Lexus RX400h, and Toyota Highlander Hybrid--are projected to cost an estimated $1,900 to $5,500 more to own during that five-year period.

The revised figures do not change our message to car buyers that the costs and benefits of hybrids vary significantly, depending on the model, and that consumers should weigh them carefully before buying one."

ellisfam2 · 03-25-2006, 06:54 AM

What makes my blood boil whenever I read these articles is the absence of the environmental effects of comparable vehicles. It's always about money. When will we start focusing on the vehicles effects on our world and not the cost. In High School, I drove a 1972 Datsun 240z. Without the stock exhaust and some fine tuning, I could get 30 MPG out of it. But there would still be the occasional cloud of smoke and fumes in my trail, not to mention the 2 plus quarts of oil I burned per month.
Maybe when the rising sea levels create the need to flip our worthless SUV's over and cut out the frame or chassis so we can use them for canoe's will we start to think differently.

Oops, sounds like I'm running for the President of the Sierra Club. Sorry...

PS. See down in Arizona Bay...

tochatihu · 03-26-2006, 03:13 PM

I have repeated the Consumer Reports analysis (following their revision), using the Camry as a more comparable car to Prius (than Corolla), and using Prius depreciation rates based on the Classic model. It show 5-year cost savings of $2626 w/o the federal incentive, and $5776 with (cf their $406 and $2494 against Corolla and "fast" depreciation). I would be happy to post the spreadsheet here, if I remembered how! Also I could then ask group help to make the other cost categories more realistic. Does anyone feel like continuing to beat this horse?

NuShrike · 05-17-2006, 03:25 PM

Remember this thread's classic? and these fantastic others by Peter Valdes-Dapena, CNNMoney.com staff writer:
"So long to gas guzzler guilt"
"Driving green: My hybrid days"
"Hybrids: Don't buy the hype"
"Saturn Vue Green Line: hybrid for tightwads"
"Who needs hybrids?"
"Best cars with great gas mileage"
"Is a hybrid right for you?"

I think there's some crow eating with today's headlines, "Mad market for used fuel-sippers".

He's been more fair recently, "Hybrids: Seven worries, seven answers", "Hybrid cars are so last century" to give him some credit.

His email is hidden these days.

03-17-2006, 01:28 AM	#1
Widdletink Join Date: Feb 2005 Location: Claremont, California Posts: 213 My Car: Model: Package: Thanks: 0 Thanked 0 Times in 0 Posts Friends: 0	Hi All, Again, I found this on AOL money and copied it for those who could not access it directly. Unfortunately, the writer used the Consumer Reports discredited article as the basis for his article. Bummer, that he did not do the research to find out that their numbers were fatally flawed. This article (in Consumer Reports) is probably going to haunt us for months if not years. Take care all, Tisza Updated:2006-03-15 09:45:19 Hybrids: Save gas, lose money Consumer Reports says hybrid cars will lose value faster than other cars. Are they right? By PETER VALDES-DAPENA, CNNMONEY STAFF WRITER NEW YORK (CNNMoney.com) - Buying a hybrid will save you money on gas...but you might still come out behind. One of two main reasons, according to a recent analysis by Consumer Reports, is an additional cost that has typically been treated as an unknown: depreciation. Another factor, the report found, is purchase price -- hybrids simply have higher sticker prices than their non-hybrid counterparts, and gas savings don't do nearly enough to close the gap. According to Consumer Reports' analysis of six hybrid gasoline/electric vehicles, they will lose 2 percent to 3 percent more in value over five years of ownership than otherwise identical non-hybrid vehicles. With the purchase price difference, depreciation and other costs like financing and insurance factored in, only the Toyota Prius and Honda Civic Hybrid would save owners any money -- $406 and $317, respectively, over 5 years. That final figure includes the impact of a federal tax incentives for hybrids. Without those incentives, Prius buyers face a net cost of ownership of $2,700 more than Corolla buyers. Other hybrid vehicles would cost owners thousands more than non-hybrids over five years of ownership, even after federal tax credits. For example, a Toyota Highlander Hybrid costs $7,185 more to purchase than the non-hybrid version. That results in $558 more in sales tax and $2,653 more in financing costs. It also will cost $358 more to insure for five years and $12 more in repair and maintenance costs. In addition, the hybrid will also lose 3.9 percent more in value than the non-hybrid. The Highlander Hybrid will save you about $1,392 in gasoline over that time. So, even with a $2,200 federal tax credit in your bank account, the Highlander Hybrid will ultimately cost you $5,508 more after five years than a similarly-equipped non-hybrid Highlander. Figures originally published in Consumer Reports magazine on March 1 showed the cost gap being much larger and none of the hybrid vehicles saving owners any money. A correction posted to the magazine's Website Wednesday morning adjusted for a miscalculation in the rate of depreciation. The corrected figures narrow the gap, but all the hybrid vehices still depreciate at a faster rate than non-hybrids, according to the magazine. Depreciation debate Depreciation is a major factor in Consumer Reports' analysis. But, experts say, it's difficult to accurately predict depreciation since few mainstream-targeted hybrid vehicles have entered the used car market. Hybrid supporter and Prius owner James Bell, publisher of the automotive guide IntelliChoice, recently sold his two-year-old Prius for just $4,000 less than he originally paid for it -- a remarkably low rate of depreciation Even Bell acknowledges, however, his experience isn't a perfect indicator. Unlike most hybrids, the Prius is a uniquely designed vehicle that exists only as a hybrid. There are still waiting lists for new Priuses at dealerships, so some impatient buyers will look for used ones instead. And even for the Prius, some experts are saying that, because of hybrid cars' technical complexity and additional costs, used car buyers will become wary of them in years to come. Still, Bell thinks hybrid cars will hold their value at least as well as, if not better than, regular, non-hybrid vehicles. "We don't see any reason at this point to think that a hybrid is going to track along as an outstanding value and then suddenly crash," he said. In spite of increased production, hybrid systems will likely remain rare enough to command a premium among used car buyers, Bell said. Nonetheless, there may be more effective ways to save on gas than buying a hybrid. Buying a smaller car, for example, or just getting a smaller engine. "Hybrids are kind of a luxury item," points out Jeff Bliskell, who wrote the feature for Consumer Reports. Some luxury items that provide a tangible benefit, like heated seats, generally add to a vehicle's resale value. Whether a hybrid powertrain provides a real benefit, and will add to the car's value, will depend on a potential buyer's feelings about the social and environmental impact of fuel consumption. Raj Sunderam, president of Automotive Lease Guide, a company that predicts residual values of cars for the purpose of calculating lease terms, also sees hybrid cars possibly losing value faster than non-hybrids. "We would agree with Consumer Reports that this is an area of caution," he said. But among the unknowns, Sunderam said, is long-term durability. "There's no track record of how they hold up after 80,000 or 100,000 miles," said Sunderam. As the number of hybrid vehicles available increases, that could also drive used hybrid prices lower. But it could also increase familiarity with the systems and ease potential used car buyers concerns about getting the car serviced, said Sunderam. Still, said Sunderam, given the issues surrounding hybrid vehicles, the prudent course is to assume they will lose value faster than non-hybrid cars. It will be up to future used car buyers to prove that assumption wrong. 2006-03-09 09:39:55 __________________ Silver '05, Pkg. #3, Custom Silver Mudflaps, Silver Door Edge Guards, black bumper applique, Madgellan 360 NAV, Silver rear window applique "Save a Soldier - Buy a HYBRID", 46 mpg average/31,900 ODO "Because He loves Me, that's why..." "Prius, the ultimate in Geek Bling"

03-17-2006, 06:26 PM	#4
doubina Join Date: Jan 2006 Location: Miami, Florida Posts: 5 My Car: Model: Package: Thanks: 0 Thanked 0 Times in 0 Posts Friends: 0	I suggest that no one pay attention to any of these articles. None of the people involved in writing them have any engineering or automotive manufacturing experience to REALLY know what they are talking about. Take my advice, buy a prius, it’s a great car! Also, before you buy, go rent one for a day or two. Hertz has them for rent, and so do most Toyota dealerships. It really helped me in making my decision. Only you know if the features in the prius benefit you, not some clown trying to make a buck by writing a stupid article. :P __________________ <span style=\'color:blue\'>"Only two things are infinite, the universe and human stupidity" Albert Einstein.</span>

03-20-2006, 11:21 PM	#7
p21usa Join Date: Dec 2005 Posts: 34 My Car: Model: Package: Thanks: 0 Thanked 0 Times in 0 Posts Friends: 0	Don't know if this was already posted but CR admitted an error in their calculations re: the Civic and Prius and now say that these two models actually show a SAVINGS! Ha Ha! CR messes up all the time. I was thrilled to send the article to all my "friends" who were razzing me after the original review came out. "Important update: This is a revised report on "The dollars and sense of hybrids" “The dollars & sense of hybrids” posted on ConsumerReports.org is a revised version of the report printed in the April issue of Consumer Reports magazine. The report has been revised because a calculation error involving projections for depreciation in the original, printed version led us to overstate how much extra money six hybrids will cost owners during the first five years, compared with owning similar all-gas models. Our revised data show that if buyers are able to take advantage of limited federal tax credits, two hybrids--the Toyota Prius and the Honda Civic Hybrid--are projected to cost about $400 and $300 less, respectively. The other four--the Ford Escape Hybrid, Honda Accord Hybrid, Lexus RX400h, and Toyota Highlander Hybrid--are projected to cost an estimated $1,900 to $5,500 more to own during that five-year period. The revised figures do not change our message to car buyers that the costs and benefits of hybrids vary significantly, depending on the model, and that consumers should weigh them carefully before buying one." __________________ '06 Silver #7

03-26-2006, 03:13 PM	#9
tochatihu Senior Member Join Date: Apr 2004 Location: Kunming Yunnan China Posts: 2,570 My Car: 2001 Prius Model: Package: Pioneer #1 Thanks: 2 Thanked 85 Times in 70 Posts Friends: 15	I have repeated the Consumer Reports analysis (following their revision), using the Camry as a more comparable car to Prius (than Corolla), and using Prius depreciation rates based on the Classic model. It show 5-year cost savings of $2626 w/o the federal incentive, and $5776 with (cf their $406 and $2494 against Corolla and "fast" depreciation). I would be happy to post the spreadsheet here, if I remembered how! Also I could then ask group help to make the other cost categories more realistic. Does anyone feel like continuing to beat this horse? __________________ DAS Tochatihu, the Hopi hummingbird kachina

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03-17-2006, 02:14 AM	#2
V8Cobrakid Senior Member Join Date: Jun 2004 Location: s.f. bay area Posts: 2,948 My Car: 2004 Prius Model: N/A Package: #9 Thanks: 10 Thanked 27 Times in 26 Posts Friends: 5	Thanks for the article. Unfortunetly i was bummed when i heard the compairison to the corolla. I think these companies need follow up emails.

03-18-2006, 12:21 AM	#5
Cameron Join Date: Feb 2006 Posts: 97 My Car: Model: Package: Thanks: 0 Thanked 0 Times in 0 Posts Friends: 0	I sat in one once. Not moving. I ordered mine a week later and am now waiting...waiting....

03-25-2006, 06:54 AM	#8
ellisfam2 Join Date: Jan 2006 Posts: 9 My Car: Model: Package: Thanks: 0 Thanked 0 Times in 0 Posts Friends: 0	What makes my blood boil whenever I read these articles is the absence of the environmental effects of comparable vehicles. It's always about money. When will we start focusing on the vehicles effects on our world and not the cost. In High School, I drove a 1972 Datsun 240z. Without the stock exhaust and some fine tuning, I could get 30 MPG out of it. But there would still be the occasional cloud of smoke and fumes in my trail, not to mention the 2 plus quarts of oil I burned per month. Maybe when the rising sea levels create the need to flip our worthless SUV's over and cut out the frame or chassis so we can use them for canoe's will we start to think differently. Oops, sounds like I'm running for the President of the Sierra Club. Sorry... PS. See down in Arizona Bay...

05-17-2006, 03:25 PM	#10
NuShrike my other Mobile Suit is a ... Join Date: Feb 2005 Posts: 1,367 My Car: Model: Package: Thanks: 0 Thanked 0 Times in 0 Posts Friends: 0	Remember this thread's classic? and these fantastic others by Peter Valdes-Dapena, CNNMoney.com staff writer: "So long to gas guzzler guilt" "Driving green: My hybrid days" "Hybrids: Don't buy the hype" "Saturn Vue Green Line: hybrid for tightwads" "Who needs hybrids?" "Best cars with great gas mileage" "Is a hybrid right for you?" I think there's some crow eating with today's headlines, "Mad market for used fuel-sippers". He's been more fair recently, "Hybrids: Seven worries, seven answers", "Hybrid cars are so last century" to give him some credit. His email is hidden these days.