Hybrid Cars: Not a Good Investment

CarGurus finds hybrid vehicles cost more to own than comparable gas-powered vehicles.

CAMBRIDGE, Mass., September 10, 2010 — CarGurus® (http://www.cargurus.com/), a leading online automotive community, has determined that the majority of hybrid vehicles cost more to own and drive than comparable gas-powered vehicles. Based on the analysis of 45 hybrid cars which have similar non-hybrid, gas powered models, on average the Hybrid models cost 25% or over $2,200 more to own and operate than their non-hybrid counterparts.

Buying a new Hybrid carries with it a substantial cost premium over comparable gas-powered vehicles. Often time this cost premium can be quite substantial. In the 45 models studied, the average MSRP of hybrids was almost $6,400 more than that of their gas-powered counterparts. But the popular idea that hybrids actually cost less to own and drive via higher resale values and reduced gas expenses proved false in 76% of the cases examined. In the large majority of cases, the gas savings from hybrids did not overcome the substantial price premium paid at the time of purchase.

Some conclusions:

  • High initial MSRP premium is bad – If you do want a hybrid, pick a model where the initial price premium over a comparable non-hybrid car or model is not significantly large. In this regard, some of the worst buys are Hybrid Trucks, namely the Chevrolet Tahoe Hybrid and the GMC Yukon Hybrid, which have MSRP premiums over their non-hybrid counterparts of over $10,000.
  • High Gas Mileage differential is good – Look for Hybrids which have substantially higher gas mileage statistics than their non-hybrid counterparts. Along these lines, good hybrid investments found were Ford’s Escape and Fusion Hybrids. In both cases, these cars benefit from a low MSRP price premium and substantial gas mileage improvements (of up to 50% higher) over their gas-only counterparts. In both cases these cars have a lower cost of ownership than their gas-only equivalent models.

“Hybrid cars really only make sense for consumers if the total cost of ownership – including the initial cost to purchase and the better gas mileage – outweigh that of a gas-only equivalent vehicle,” remarked Langley Steinert, CEO/Founder of CarGurus. “Unfortunately, the vast majority of the hybrids we analyzed don’t fit this criteria. Consumers need to be careful not to overpay for a Hybrid in the form of higher MSRP pricing. Otherwise, that upfront investment at the time of purchasing the car won’t be recouped during the time of ownership even given the improved gas mileage of a hybrid.”

CarGurus Hybrid Value Retention Analysis – Methodology
CarGurus looked at the total cost of ownership for 45 hybrid vehicles from the model years 2003 to 2010 that have similar non-hybrid versions. The total cost of ownership for the hybrid and non-hybrid models was compared for each vehicle to determine the total cost of ownership premium for hybrids. This total cost of ownership included the initial purchase price, lost value in terms of depreciation, and total gas costs over the time period analyzed.

About CarGurus LLC and DealFinder
Located in Harvard Square, Cambridge, Mass., CarGurus LLC is a leading online automotive community founded by Langley Steinert , formerly Chairman/co-founder of TripAdvisor LLC, the 2nd largest online travel site in the world.

CarGurus’ DealFinder is an online car shopping service that helps consumers find the best deals on new and used cars in their local area. Indexing over 1 million listings a day, CarGurus’ DealFinder analyzes each car listing and compares the listed price against historic pricing models to gauge whether the listing is a good deal or bad deal. CarGurus’ DealFinder helps consumers save time and money when shopping for a new or used car. For more information about CarGurus, visit us at www.cargurus.com.

Contact: Kerry Metzdorf, Plum Advisors
978-463-2575
kerry@plumadvisors.com

4 Comments

  1. On my Prius I replaced a pump for cooling the inverter at 80,000 which would not be on a non Hybrid car. Other than that, the water and timing belt which I have had to replace on 4 cylinder cars at 75,000 miles, I went 10,000 miles further on this car. Also, the brakes are only 25% worn. I would be replacing them twice by now on every other car I have had.

  2. If the title were “. . . study finds SOME hybrids cost more . . .” and then lists the ranking of the hybrids, it would be useful. Better still, list the 45 hybrids and numbers so we can see the relative gain or loss. This would then be a useful report. But instead, all we have is a blanket statement that seems at odds with other studies.

    Consumer Reports publishes open reports such as “Best Overall Value” (05/09), “Tops User Satisfaction” (06/08), and “Least Expensive Family Car” (04/08). These are open reports listing vehicles and numbers so reads can (and do) check their work. But this report is closed because it does not list the ’45 models’ and their associated metrics.

    The ‘Dashboard Hybrid Sales August 2010 lists only 28 hybrid models, not 45, and includes the $100,000, Lexus LS600hL. Somehow, it is hard to see someone paying $100,000 really being concerned about the cost of fuel. That is why the numbers, not only the ones collected for this report but also the sales are important.

    Hybrid owners, particularly Prius owners, have dealt with skeptic claims for 10 years. We’ve become skilled at reading the numbers and finding mistakes such as the CNW Marketing “Dust-to-Dust” report where vehicle ‘life time mileage’ was consistently adjusted to falsely claim the now dead Hummer had a lower cost per mile than the Prius. There was a two month period where only the ‘press release’, an executive summary, was available. But when the numbers came out in public, “Dust-to-Dust” joined the Hummer dealerships.

    There are and have been lousy hybrids. GM finally killed the Belt Assisted (BAS) lines in May, right after Lutz finally retired. Many of us have noticed the “two-modes” are crippled and three of us who test drove a Saturn VUE ‘two-mode’ in January 2009 (actually not a bad car) learned directly of the GM rot. I think the buzzards are circling White Plains where the two-modes were made and the Volt . . . well everyone deserves a chance to succeed or fail.

    But going back to this report, we found historically that there has been a fondness of mismatching transmissions and options between hybrids and non-hybrids. For example, using a subcompact Aveo as the alternative to Prius 2004-09, NHW20, a full size sedan based upon EPA classification. By publishing the list and prices, by being open so we can independently validate and verify the numbers, the report gains credibility. Otherwise, it too easily resembles the failed CNW Marketing “Dust-to-Dust” report.

    Bob Wilson, Huntsville, AL

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