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Hybrids Worth the Price

From a dollars-and-cents perspective, the decision to buy a hybrid is never simple.

By Mark Solheim

September 1, 2008

When Kiplinger's looked at the costs versus benefits of buying a hybrid two years ago, we concluded that most drivers would see long-term savings only with the smallest, most fuel-efficient models -- namely, the Toyota Prius and Honda Civic Hybrid.

KIP TOOL: HYBRID CALCULATOR
	Does It Pay to Buy That Hybrid? Find Out

But at that time, gas cost only $2.30 a gallon. Now that gas prices have hit the stratosphere, more hybrids make financial sense. But with some hybrid models, you won't even come close to getting back the premium you pay.

To reach that conclusion, we compared the five-year ownership costs of 13 hybrids with those of their gas-engine counterparts. Our math is based on actual transactions, rather than sticker prices, and assumes a 15% down payment, a five-year loan and 15,000 miles of driving a year -- 55% of those at city speeds. Vincentric supplied the data.

Besides sucking less gas, many hybrids save on taxes and fees because they qualify for a one-time tax credit, which we took into account. A factor that we couldn't include is a potential discount on your car insurance. Travelers, for example, offers a 10% discount for hybrids in most states.

Best and worst. At the top of the list for value is the 2008 Saturn Vue Hybrid, which is projected to cost $2,500 less over five years than the gas-engine Vue XE. The numbers also favor the Nissan Altima Hybrid ($2,100 less than the Altima S), the Lexus RX 400h ($1,100 less than the RX 350) and the Honda Civic Hybrid ($1,000 less than the Civic EX). The Altima Hybrid is sold in only eight states -- California, Connecticut, Maine, Massachusetts, New Jersey, New York, Rhode Island and Vermont.

It's tough to justify buying a car at the bottom of the list. The Lexus LS 600h L costs $35,000 more in total costs than the LS 460 L, mainly because of its $32,000-higher sticker price. The Lexus GS 450h costs $16,900 more than the GS 350, and the Chevrolet Tahoe Hybrid costs $10,700 more than the Tahoe LT.

The middle group of hybrids has ownership costs that run from slightly to significantly higher. The Ford Escape Hybrid costs $200 more over five years than the Escape XLT four-cylinder; the Chevrolet Malibu Hybrid costs $400 more than the Malibu LT; and the Saturn Aura Hybrid costs $1,700 more than the Aura XE.

The Toyota Highlander Hybrid (which has four-wheel drive) will cost $2,200 more to drive than the Highlander base four-wheel-drive model; the Toyota Camry Hybrid will set you back $2,700 compared with the Camry LE.

You could still come out ahead with these in-between hybrids if gasoline prices rise. For example, with the Ford Escape Hybrid, you'd erase the price premium if gas were to average $4.50 a gallon.

What about the Toyota Prius? For many Americans, the white-hot hybrid symbolizes green driving. Many dealers have months-long waiting lists and are charging $1,000 to $1,500 more than the $23,135 sticker.

Compared with what? Even so, if you look at the total ownership cost over five years, the Toyota Prius ties the Honda Civic Hybrid for least expensive ($39,780). The Nissan Altima Hybrid ($40,730) is next cheapest, followed by the Chevy Malibu ($44,810), Toyota Camry ($45,140), Ford Escape ($45,860) and Saturn Vue ($46,120) hybrids.

But hybrids aren't the cheapest rides. A number of nonhybrid gas sippers cost less to own over five years. One of the best values is the Honda Fit, which costs $35,650 to operate over five years. The Nissan Versa costs $36,520. If you want more room, consider the Toyota Matrix, which is projected to cost $39,680 over five years.

From Kiplinger's Personal Finance magazine, October 2008

Got a question? E-mail Mark at cars@kiplinger.com

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POSTED BY: sid (September 08, 2008 01:37 PM)
If you're one and only aim is to save money, buy a used Toyota Camry for about $12,000 and enjoy 30+ mpg highway and about 25 city. I can't understand spending $35,000 on a new hybrid if my aim is to save money. That's a lot of miles to drive even at $5/ gallon gas.

POSTED BY: GoGlobalWarming (September 08, 2008 01:56 PM)
How about buying a used car? If you buy a car that is 3 years old, with 45K miles on it you can come in under $40K for 5 years. Take a 2005 Ford Explorer 4X4 with the large engine (4.6L) and 45K miles on it. Assume it gets an average of 16 mpg (like mine does). 75,000 miles/16mpg = 4687.5gallons X $3.5/gallon = $16,406.25. The cost of the car would be about $14,650 retail (see www.kbb.com). If you get a 5-year loan at 7% and 15% down the total cost of the car is $16,992 for a total of about $33,400. The article did not mention whether maintenance costs were included, but even if you include those you come out ahead of buying a brand new hybrid AND you get a much cooler, fun to drive car that fits people over 6’ tall. These numbers would be even smaller if you compared a new hybrid to a used compact car. The hybrid mania is so blown out of proportion that people (apparently bad at math) would pay thousands above MSRP in order to get one. It’s a whole different story if you believe you are saving the planet with your hybrid. People will pay a whole lot more for faith-based purchases. I personally am glad that I’m not putting the huge, toxic batteries back into the landfill with my Explorer. Buying a brand new car is an extremely bad thing to do with your money, and frankly I surprised that Kiplinger is recommending it.

POSTED BY: JD (September 08, 2008 02:55 PM)
How about the used 1995 Honda Accord I bought in 2002? I can't tally my exact gas costs back that far, but I drove 10,000 miles/year and averaged 25mpg city and 30+ highway. At $4/gallon that would be $1500/year on gas, plus my purchase price and maintenance (I have those records) totaling ~$9,000 over the first five years. Hmmm... my car cost me $16,500, and it's a fine four-door sedan. Seems I could have gotten two of them for the cost of a cramped P(r)ius.

POSTED BY: SteveTheHawk (September 08, 2008 03:15 PM)
I agree in regards to the Toyota Matrix. I gave momentary thought to a Prius but with cost of ownership being about the same, I purchased a Matrix last year. I also bought it at a great price because of a factory rebate, cheap financing and a dealer sale (well below sticker). The Matrix has a nice amount of room in it even for a large guy like me. In addition, I don't have the uncertainty of what happens when the battery packs fail, etc.

POSTED BY: Phil (September 08, 2008 03:30 PM)
Don't buy the civic hybrid...The car is a lemon.

POSTED BY: michaelB (September 08, 2008 06:27 PM)
To often we forget to consider: 1. The cost of purchasing a battery by the time you hit over 120K and 5 years. 2. Resale decrease -- Who would buy a used hybrid when they may need to soon buy $2-5,000 battery (which, by the way, is not-recyclable!).

POSTED BY: Hasse Detyens (September 08, 2008 07:11 PM)
I've had my Honda Civic Hybrid (2006) about a year and a half. I get 46 mpg in the city and on the road i've gotten 53 mpg. Would not trade it for anything!

POSTED BY: techperson (September 09, 2008 06:18 PM)
...Hybrids depreciate very slowly, and depreciation is the biggest cost of owning any car. Priced a used Prius lately? I've owned a Civic Hybrid (mine was great; sorry you got a lemon, Phil) and now a Camry Hybrid. The resale value on the Camry has made it FAR cheaper to drive than a new Camry. Next will be a plug-in 4WD Highlander when they come out in 2010. Remember: When you read an article on hybrids comparing gas savings to incremental initial costs without accounting for differences in depreciation, someone is pulling the wool over your eyes. Go to the Vincentric website and see how hybrids dominate their categories as best buys.

POSTED BY: bwalker (October 30, 2008 01:54 PM)
I bought a used Geo Metro. I paid $700 for it and get around 40mpg. Runs like a charm. Calculate that.

POSTED BY: Hank (November 03, 2008 08:55 AM)
I bought the first model year of the Honda Fit. I get up to 40 mpg on a long steady trip and regularly get over 35 mpg in regular driving around town. Great car!

POSTED BY: David (November 03, 2008 09:02 AM)
Only a sucker would buy a new car with all that depreciation. Now where can I buy a good used Metro or Echo?

POSTED BY: Paul in MD (November 03, 2008 09:12 AM)
That's right...let's only look at the individual cost/benefit. Jeez that's the problem with this country. If it's only about saving money, first, want to save A LOT of money? Live close enough to work to walk or ride a bike. Second, if you have to buy a car, buy a used car with high reliability, like a mid-90's Carolla or Civic -- low cost, decent gas mileage, and very low insurance. All that aside though, there are huge societal reasons for buying a hybrid, even if they don't break even on an individual level. First is national security. Hybrids reduce the demand for gas, which in turn reduce the demand for oil, which in turn puts fewer American dollars in the hands of Middle Eastern nations that hate our guts. But for our need for the oil we wouldn't give a gosh darn what happened over there. I am tired of the Middle Eastern tail wagging the American dog. The second reason is the reduced carbon footprint (and I'm confident we'll solve the battery disposal issue). By 2015, every new car, light truck and van sold in the US should be a hybrid or alternative fuel vehicle.

POSTED BY: sammie (November 03, 2008 09:27 AM)
and the nice thing about that little "car"..no parking problems..

POSTED BY: \'Olboy (November 03, 2008 09:30 AM)
Eleven months ago I bought a 2001 Mercury Grand Marquis with 57,000 actual miles for $4,775 and then spent @ $600 for tires and front brakes. During this time I have driven it 15,000 miles at 17-19 mpg for city miles and 27-31 mpg for highway miles, both dependent on speed, quality of fuel, weather, traffic, road conditions, etc. Think savings on interest, insurance and depreciation. Based on past experience, I should get another 150,000 miles with relatively few problems. My last Grand Marquis, a 1999 was wholesaled for $1,526 a year ago after going 213,000 miles with never any oil added between changes and never an oil leak on the driveway. No engine nor transmission problems either. My experience with a 1992 Lincoln Town Car (same engine and running gear) was similar. As my farm-folk elders were prone to say many years ago "there are more ways to kill a cat than strangling them with butter"

POSTED BY: carguy (November 03, 2008 09:40 AM)
My mother owned a FORD FESTIVA back in the day. We mocked her and carried it down the street during many parties. Now I'm older and I think, what a good car. Here's why: It got 44 miles per gallon and though it was a roller skate; it was very easy to fix. Makes me wonder about these hybrids that now get 30 miles a gallon! (huh? My 2002 Mitsubishi Lancer gets 29 miles a gallon.) I'll wait until they average 70 mpg.

POSTED BY: dd (November 03, 2008 09:42 AM)
Now that gas prices are back to around $2.30/gallon (Nat. Ave $2.42 as of today and still dropping). The cost advantage will disappear as quickly as it appeared with the exception of the very smallest and fuel efficient models as mentioned at the beginning of the article. As for depreciation, I would expect that slow decline to turn into a cliff. This is nothing more than history repeating itself. Once the oil industry sees customers getting serious about alternatives, the price comes down to protect their interest. The last thing they want is electric cars to be cost effective. Hybrids are a step in that direction. Don't expect them to be cost effective. Just enjoy the fact that you are slowly chipping away at the oil industry and one day we may be able to break free.

POSTED BY: trn8o (November 03, 2008 10:40 AM)
I have Mercury Mariner Hybrid(same same as Ford Escape) I do better than sticker mileage, but sitting at a stoplight when my emmissions are ZERO I feel so good that I don't CARE that over 5 years it might cost an extra $1.25

POSTED BY: RON HONNEY (November 03, 2008 10:53 AM)
...You and others conveniently leave out the replacement cost of the 600 pound BATTERY which the hybrid people claim lasts 8 to 10 years. Plus labor including crane and licensed crane operator plus trained people in electrical safey for removing this hi-tech giant. And what is the dealers pro rated deduction at trade in time for the battery and replacement cost? Oh you should add two 5 year lead acid batteries to the conventional gas car at 85 dollars each to be fair. My opinion.... Which is cheaper?

POSTED BY: DJY (November 03, 2008 11:19 AM)
The bigger and more important issue about Hybrids is the reduction of green house carbon emissons, not just cost savings from getting better MPG!

POSTED BY: Hybrid Camry Owner (November 03, 2008 12:43 PM)
Time to hear from someone who has actually owned one of these cars for over 2 years. For years now "the"y have been saying hybrids aren't worth it - blah blah blah.... What kind of whacky math are they using? I bought an almost loaded 2007 Camry Hybrid in August of 2006 for $27,650....When I did my tax return in April 2007 I received $2,600 additional funds back from the IRS for purchasing the car. At the time I purchased the hybrid there were 3 other regular Camry's on the lot - 2 had a lower sticker price but didn't have the options or horsepower of mine and one had a $30,100 sticker (it was the XLE fully loaded). I've been getting approx 37 - 40 mpg consistently using REAL math: Filling the tank, watching the mileage then calculating what it actually had cost me at the pump, etc. I found that the gage in the car that tells you what you've been getting for each trip, etc. is very accurate. Also, the whole going-fast thing is a myth. I set my cruise control on 72 mph driving to the shore every weekend and I usually get around 40 mpg for those trips. As an added bonus it's a nice roomy sedan that doesn't have nearly the amount of smelly exhaust of other cars. It also has a lot of Lexus options for some reason like a Plasmacluster air sytem (sort of like a Sharper Image thing), CVT (shiftless transmission), and that technology that helps keep your car from going into a skid. All in all, I think my car is well worth what I paid for it.

POSTED BY: Amy Obrist (November 03, 2008 01:01 PM)
Why name the Toyota Matrix first, when Pontiac's Vibe is identical (a joint venture between Pontiac and Toyota, made in CA) and is an excellent, relatively roomy, gas-saving and American built alternative...

POSTED BY: Tim (November 03, 2008 01:03 PM)
I just paid off my 2005 Prius. I drive about 90 miles a day (approximately), and average 49mpg, even driving 80 mph on the freeway. I figure the amount of money I've saved in three years has more than covered maintenance (oil changes and tires--stuff that I'd need to do on my old Camry, so it's a wash) and any future purchase of a battery. Plus it's a fun car to drive.

POSTED BY: Richard (November 03, 2008 01:03 PM)
I bought a 2002 Chevy Malibu with about 76,000 miles on it, in 2004, and since that time I now have around 180,000 miles on it and have replaced only a few engine parts, but am now looking at replacing the front drive shaft. But overall, the car has been good, I'm looking at keeping it until it just stops running on me. And after that Ill pull my trans am out of the garage.

POSTED BY: Joe (November 03, 2008 01:03 PM)
Once again you compare apples to oranges. You compare the Escape Hybrid with a 4 cylinder model. Yet when I was purchasing, the 4 cylinder regulare model was not a consideration. Noisey and under-powered. My comparison was with the 6-cylinder model. When I purchased my Highlander hybrid, I compared trim levels. You don't here. The vehicle you compare it to is one without power seats and leather to name a few.

POSTED BY: harold (November 03, 2008 01:47 PM)
(To the reader who claims)...batteries weigh 600 lbs? The older prius's are 167lbs & the newer ones even less. Do the research before spouting off! I love my Prius.

POSTED BY: Rick Cordisco (November 03, 2008 04:26 PM)
A car that runs on air, how soon do you think someone will start charging $4.50 per gallon (lb) for air.

POSTED BY: Auto-pilot (November 03, 2008 04:46 PM)
...Regarding the battery replacement, the comment is dead on. No one EVER mentions the fact that the electric battery needs to be replaced within five years, often within three. The cost? Between $3000-$6000! What a savings? I know, I know, the good vibrations you get while "driving green" far outweigh the cost, even if it does come out higher than a non-hybrid. Just wait until we blow out the power grids on a daily basis with our escalating use of electicity. Hello. Electricity isn't green, folks. The pollution associated with producing ANY energy in mass quantities needs to become a factor. So often it is overlooked. Electricity is also not any more sustainable than natural gas and oil. When our demand for electric energy surpasses supply, what then? There are ways to make ALL sources of energy cleaner, and those endeavors may be the smartest choice.

POSTED BY: Stapleford (November 03, 2008 05:12 PM)
A couple years ago, the federal goverment allowed for a $1,500 credit on federal taxes...this credit did narrow the gap. Another cost is the "unknown factor" of this new technology, ie; battery replacement, core, and other. This unknown factor can come back to bite you if your thinking is to save a few bucks on gas. Gas prices are now low again and more consumers compare initial cost now to nonhybrid. Gas prices are the main market drivers. I'll let someone else save the world.

POSTED BY: nocheeto (November 03, 2008 06:11 PM)
...the reason we should consider hybrids and improving the technology for efficiency is to STOP wasting oil, not to save a buck. if the USA drives about 50% of the worlds miles, we are half responsible for running out the supply for our grandchildren. and you can't fly planes on a hybrid system. WHAT THEN??? is that resale value and dollar you saved really worth it?? wouldn't you rather give your money to a prius than exxon?? honest? wake up. its not about money

POSTED BY: Kermit (November 03, 2008 07:11 PM)
The real way to save money is to stop thinking of vehicles as status symbols and think of them for what they really are, hunks of metal that get you from one place to the next. If you really care to save money, buy a used car outright and save the monthly car payment, this also means one less car that needs to be produced, and that has more of an ecological impact than whatever hybrid needs to be build to satisfy your consumption needs.

POSTED BY: Bean Counter (November 03, 2008 07:43 PM)
Auto-Pilot, you're the first one I've ever seen to mention the cost of battery replacement. If you sell the car before you have to replace them, someone is going to have to do it, which I'm sure would be reflected in the resale price! How much would you pay for a car that is going to need a $3-6,000 repair? Also, car makers will make whatever the public demands. Nobody forced the public to buy all those SUV's on the road. Watch how quickly the car makers change their models, and without any federal agency telling them to do it!

POSTED BY: Centralize (November 03, 2008 11:49 PM)
The one thing that gets me is this common belief in the U.S. that the only way to produce electricity is through coal-fired plants. What about nuclear power? I realize this is a taboo topic because two prominent reactors suffered meltdowns...But, great advances have been made in the efficiency of nuclear reactors, and they provide a relatively clean source of energy. In addition, France provides almost 80% of its power with nuclear power plants and they still have not suffered a reactor meltdown. Sure the one major byproduct is typically considered dangerous for thousands of years, but if reprocessing were to be allowed again in the US, the amount of radioactive waste produced would be greatly reduced. It all comes down to efficiency. Large scale operations tend to be capable of higher efficiencies when it comes to energy production. So, build more nuclear (or other clean alternative) power plants and switch over to plug-in hybrids or electric cars. Or use the powerplants to directly electrolyze water for hydrogen fuel-cell vehicles, which only have two legitimate reasons they are not on the road:...distribution centers and the safety issues that arise when one is required to transport a pressurized, explosive gas (a several thousand PSI tank of hydrogen going off in a car accident would not be a pretty sight).

POSTED BY: ian (November 04, 2008 12:26 AM)
The batteries do not have to be replaced every few years. First of all, they are mandated to be under warranty for 8 years in most states and 10 years in more progressive states(NY for instance). Hybrids are now over 10 years old, and the terrible problem with batteries has yet to materialize. Most are still on the road, and many are still under warranty.

POSTED BY: tz-engineer (November 04, 2008 01:00 AM)
I hear you on the "Save More Oil" argument but I'll have to break your bubble. When you consider the extra energy used to produce these futuristic cars (that's why they cost more too), the extra energy put into maintenance, and the extra energy used to recycle the exotic materials used... then you will see that you waste way more resources than if you just go with an Non-Hybrid. And if you don't live in a large city...you are not even using it as its designers inteded it to be used.

POSTED BY: mr,arizona (November 04, 2008 01:30 AM)
...if you haven't read the latest trend...check this out! A new car created by a genius...Indian car maker has designed a vehicle to travel 800 miles not 8 not 80 but 800! miles on a pint of gas wine or vinegar and runs on this is the kicker.... AIR! heres the interesting part it only costs a WOPPING 20,000.00 usd the kicker it only goes 35mph but think about it 1) a pint of gas =800miles a tank 2) money you'll save 3)ECO-FRIENDLY 4) for the previous comment for NOCHEETO you get the best of everything technology is out its just crawling out eager to run!

POSTED BY: Aida Valentin (November 04, 2008 02:23 AM)
We need another transportation system, we can not longer depend (on) gasoline... Eletric, Air power, Sun power! Please! as long we are not depending on gas, someone far away, has the manipulation of this society..

POSTED BY: on this page (November 04, 2008 05:52 AM)
okay so i agree with both of these people, but in the long run our money goes to these big industry oil companies. i feel the best way to get away from using oil is to invest in tech. That will allow us to not use it at all. Like the air powered car...i'm not saying its the best idea but it is a better way of using other tech...i feel that the best way to get away from oil is to not use it.

POSTED BY: Magoo (November 04, 2008 06:22 PM)
No one and I mean no one talks about what happens to batteries from the hybids. It's not like you can just throw them away. If they aren't disposed of properly, they will surely contaminate the evironment. Are hybrids really 'green'?

POSTED BY: antont (November 27, 2008 10:27 AM)
Our planet is getting dirtier and overcrowded by the minute. If you want to burn fuel, do it. When it's over we'll burn something else. But please, if you wanna ride that big truck, go in Nebraska, or South Dakota.

POSTED BY: Hybrid Owner (November 27, 2008 03:44 PM)
The numbers are flawed for a large category of buyers. The Escape Hybrid LIMITED that I bought was only $35,000 loaded with all the options. Your price of $45,860 must assume that the person has horrible credit and is paying through the nose for car insurance and finance charges. Most people trade a car in, or put plenty of cash down - especially HYBRID BUYERS. So with my actual price of $35,000 minus the $3000 tax credit off my federal income tax, plus the 34 mpg rating (cost me $24.00 to fill up in California) - then I'd say that my savings are MUCH HIGHER than your article claims, and the Escape is worth the investment versus a purely gas vehicle. And you forgot to mention the savings in the air quality and guilt factor. We have pride knowing that we are proactively improving air quality, allowing us to sleep better at night than those who use the excuse "well one car less won't make a difference, so lets just get another gas hog"...It's not just about the money.

POSTED BY: Ralph (November 27, 2008 04:47 PM)
This story is somewhat outdated. Gas is $1.69 where I live and going down.

POSTED BY: Guilt Freeks (November 30, 2008 10:15 PM)
Guilt...Give me a break...Global Warming has not been proved to be caused by man and has not even been proved as a phenomenon. Your guilt is a product of your being brainwashed by the media. Get over yourself...

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