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Hybrids: Save Gas, Lose money

Discussion in 'Prius, Hybrid, EV and Alt-Fuel News' started by Widdletink, Mar 17, 2006.

  1. Widdletink

    Widdletink Member

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    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
     
    #1 Widdletink, Mar 17, 2006
  2. V8Cobrakid

    V8Cobrakid Green Handyman

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    Thanks for the article. Unfortunetly i was bummed when i heard the compairison to the corolla. I think these companies need follow up emails.
     
    #2 V8Cobrakid, Mar 17, 2006
  3. Cameron

    Cameron New Member

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    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?
     
    #3 Cameron, Mar 17, 2006
  4. doubina

    doubina New Member

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    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 :lol: :D
     
    #4 doubina, Mar 17, 2006
  5. Cameron

    Cameron New Member

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    I sat in one once. Not moving. I ordered mine a week later and am now waiting...waiting....
     
    #5 Cameron, Mar 18, 2006
  6. Begreen

    Begreen Member

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    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.
     
    #6 Begreen, Mar 18, 2006
  7. p21usa

    p21usa New Member

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    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."
     
    #7 p21usa, Mar 20, 2006
  8. ellisfam2

    ellisfam2 New Member

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    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... :rolleyes:
     
    #8 ellisfam2, Mar 25, 2006
  9. tochatihu

    tochatihu Senior Member

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    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?
     
    #9 tochatihu, Mar 26, 2006
  10. NuShrike

    NuShrike Active Member

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    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.
     
    #10 NuShrike, May 17, 2006
  11. tochatihu

    tochatihu Senior Member

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    Today's visit to the Edmunds, KBB and NADA internet used car evaluation web sites for a 2004 base Prius with 30k miles, good condition, averaged:

    $19,100 trade-in
    $20,300 private party sale
    $22,600 dealer retail.

    Use whatever the original cost might have been and figure your own 2-year depreciation. Reasonable folks, I expect, will agree that depreciation in the actual marketplace is not one of Prius' shortcomings.

    Of course, Prius depreciation over the next 3 years could shoot up to 56.1%, as Consumer Reports predicts (and has not revised, even after I pushed them on the subject). Hey, anything could happen in the future! If US gasoline prices fall below $2/gallon, and if a whole lot of Prius transmissions and batteries fail, it certainly could happen.

    If you expect the most likely Prius future to be bleak, sell your Prius while you still can! Otherwise, stay in and continue saving money.
     
    #11 tochatihu, May 17, 2006
  12. brandon

    brandon Member

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    <div class='quotetop'>QUOTE(tochatihu @ May 17 2006, 03:30 PM) [snapback]257115[/snapback]</div>
    Of course, there's nothing to indicate any of those things might happen.
     
    #12 brandon, May 17, 2006
  13. tochatihu

    tochatihu Senior Member

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    <div class='quotetop'>QUOTE(brandon @ May 17 2006, 02:33 PM) [snapback]257150[/snapback]</div>
    I think I am being outed for sarcasm here. Brandon, probably neither you nor I suppose that cheap gas is "just around the corner". Of the Prius in the US, something like 10 each of transmissions and HV batteries have checked in to the internet groups with major problems. It's a good question what fraction of owners we actually see in the groups; I suppose it is 5 to 10% of the total.

    There are efforts afoot (by Ifixem and Bob Wilson; maybe others) to see if the trans can be improved. The HV battery, I think, is "what it is". Toyota has taken their best shot at longevity, it appears to be working, and there is little we can do to help.

    My 2001 Prius has only 87k miles, but shows no signs of incipient demise. If gas prices increase above $6/gallon I will have to see if changing to something else could decrease my total cents/mile. From an enviromental perspective, cars suck, but hybrids seem to be among the best of a bad lot. I consider it an honor to be able to discuss these matters here.

    Those who suggest that hybrids "save gas but lose money" are simply not looking at the same numbers that I am. I predict that you will be hearing a lot less from them in the future.
     
    #13 tochatihu, May 17, 2006
  14. IFixEm

    IFixEm New Member

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    <div class='quotetop'>QUOTE(tochatihu @ May 17 2006, 01:30 PM) [snapback]257115[/snapback]</div>
    Last Friday we had a prius chatter trade in his 04. When I came in on Sunday to do some tinkering, it was being delivered (to a clasic owner) with a sticker of 22.4. I am not sure what we got it or sold it for but it was not on the lot 2 days. We have a customer base of 430 and growing by one a day it seems. Lots of MIL and ! lamps, alwasy nothing big. One MG2 winding failure. One. With 160k on it. I made alot of mortgage payments rebuilding GM transmissions under warranty. A guy would starve to death waiting for yoda boxes to fail. Now that I have seen the belly of the beast there are a fair amount of HV transaxle repairs that can be done " in the vehicle"...including MG2 winding set.
    I dare you to find any product platform that has been as reliable in the first 80k than prius. Camry's puke water pumps, corollas eat 02 sensors, injectors plug on everything out there but the prius. MAF's get grungy on sienna's and camrys. Trucks need timing belts ($700 for belt and pump on a tundra/sequoia) every 90k. You don't have to change the belt, but the 2uzFe is an interferance motor with 32 valves at $100 each. Do you feel lucky....well do ya punk?
    Prius depreciation seems to be small because the price is "whatever the market will bear", and it seems to be quite close to MSRP to me.
    Environmentally speaking the tailpipe emmisions are good but lets also look at what the don't do.....leak oil and kill my fish. I have never repaired an oil leak on a prius. I have never recharged an a/c system on a prius. If you followed my maint schedual (not the dealers) it would cost about $800.00 in the first 100k.
    Call it guilt or whatever but as I close in on retiring, I think of hybrids as my last hu-ra. If I can keep them in good grace with the public I will do whatever it takes. The seem to be every bit as reliable as corrolas and then some. Where people come up with this bunk and the fact the get it into print is astounding. They should make that jack arse not only retract, but publically appologize and drive a H1 hummer for a month paying for fuel out of pocket.
    Regards, Mad mike
     
    #14 IFixEm, May 17, 2006
  15. Frank Hudon

    Frank Hudon Senior Member

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    Local rag, Vancouver Sun, today has an article on gas prices and the cost of taxi useage of Prius vehicles and Andrew Grant is there again with his 2k4 Prius cab with over 400,000km's on it and wouldn't you know, Toyota is taking it back to Japan for dissambley and inspection just as they did on his 2001 Prius cab with 320,000km's of Taxi service. Both without any hybrid related failures and the car payed for itself with just 2 years of Taxi operation just on money saved on fuel alone. As the Yellow Cab has 42 Prius in their fleet you can be assured that they are cost effective or they'd be replace with something that was. The suite and tie morrons shouldn't write articles on cars, go talk to the guy with grease under his nails and scars on his hands, their the ones that really know.
     
    #15 Frank Hudon, May 17, 2006
  16. 3sgte

    3sgte New Member

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    <div class='quotetop'>QUOTE(Frank Hudon @ May 18 2006, 11:34 AM) [snapback]257290[/snapback]</div>
    I would love to see that article.
    If you can arrange anything, I am sure it would be greatly appreciated by all here, not just me!
    A web search didn't turn up anything for me.

    Edit:
    Is this the article:
    http://www.canada.com/theprovince/news/dri...d0-dd5c4902c78e
     
    #16 3sgte, May 17, 2006
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