The deal on hybrids

Zoomer | June 27th, 2008

“The price of oil just reached a new record high.”

Tired of seeing this headline? The words may change but the fact remains that
the price of gas won’t be coming down anytime soon. In addition, we’re constantly
reminded to reduce emissions… or face dire environmental consequences down
the road.

It’s hardly surprising that these factors are inspiring more people
to look at alternative technologies before making their next vehicle purchase.
A recent report from J.D.
Power and Associates shows that an increasing number of people are thinking
about hybrids for their next car. Over 70 per cent of people surveyed report
that they are “definitely/probably” interested in hybrid-technology in their
next vehicle.

However, price is a deciding factor for many consumers. That number drops to
46 per cent when the minimum $5000 price difference is revealed. It’s
impossible to say that all hybrids will save you money in the long run, or to
put an accurate number to changing costs and variables. If you’re hoping
to save some green while driving green, here’s what you should know:

Super models

If you’re looking for the next top model, there is a variety of lists
on the internet, including the Top
Hybrids on MSN Autos and Yahoo! Autos’ Top
10 Hybrids for This Week. Kanetix.ca just published its annual report on
the hybrids most often quoted for car insurance in Canada in Hot
hybrids: The 10 most popular hybrids. The ranks change, but the main players
stay consistent. Here are the top picks:

Sedans: Toyota’s Prius has been a top-seller for the past few years,
but the larger Camry Hybrid is also gaining in popularity. Other popular models
in this class include the hybrid versions of the Honda Civic, Honda Accord,
Nissan Altima, Mazda Tribute and Chevy Malibu, and the Saturn Vue Greenline.

SUVs: Traditionally the gas-guzzlers of the crowd, SUV hybrids are garnering
more attention because they’re becoming more fuel efficient and environmentally-friendly.
The Toyota Highlander, Ford Escape and Mercury Mariner all come in hybrid versions.
If you’re looking for a little luxury, try the highly-ranked Lexus RX
400h.

On average, the manufacturer’s suggested retail price (MSRP) for hybrid-electric vehicles will be at least $5000 more than their comparable non-hybrid counterparts. Be sure to compare apples to apples when looking at the sticker price: hybrid vehicles tend to have more “bells and whistles”. If you’re looking at value for your dollar, compare a mid-range or luxury models to the hybrid rather than a base-model. Prices start at approximately $26 500 in Canada.

Gas savings

We could fill this section with miles per gallon statistics for a variety of models, but the costs really depend on how much you drive and how you drive (highway or city). If you drive to work everyday or travel a lot, you’re more likely to reap the benefits than if your new vehicle sees occasional or pleasure use.

Remember: not at all models are created equal, and some may not offer the savings you want. Don’t be surprised to see better gas mileage for city driving rather than highway driving. The numbers have to do with how the technology works – many models switch completely to the electric engine when idling. Size also matters. For example, a six cylinder hybrid may consume as much gasoline as your average fuel efficient non-hybrid car. SUVs generally consume more than sedans.

Sometimes “real world” driving doesn’t match the posted ratings
— but the numbers on this year’s models are more accurate, and therefore
may not be as high as in the past. The ratings are now broken down into city
and highway driving estimates. The Toyota Prius remains top of the list with
EPA fuel economy estimates at 48 mpg city/45 mpg highway (U.S. gallons). Larger sedans vary
in efficiency and price. Many of the SUV hybrids offer ratings in the low twenties.

To check up on numbers for more of this year’s group, see the J.D. Power
and Associates’ Hybrids
2008—More Choices Than Ever.

What about rebates?

Rebates used to be a significant factor in reducing the costs of purchasing
a hybrid, but many programs are limited both in terms of duration and eligibility.
Since government initiatives tend to be based on sales taxes rebates, and not
all provinces offer them. Here’s how the numbers play out:

Canada wide: The ecoAUTO
Rebate Program offers a rebate between $1000 – $2000 to people who buy or
lease new fuel efficient vehicles (hybrids included) between March 20, 2007
and December 31, 2008. The bad news: only 2006, 2007 and 2008 models are eligible
and the program will be discontinued December 31, 2008.

British
Columbia: As of February 20, 2008 most full efficient vehicle buyers will
receive up to $2000 back. So far, only 2007 and 2008 are included.

Manitoba
offers up to $2000 back, but the program ends November 15, 2008. This program
covers the widest variety of makes and includes most 2009 models. See the Eligibility
List for more details.

Ontario:
up to $2000 for vehicles purchased between March 23, 2006 and April 1, 2012.

PEI
collects the highest amount of provincial taxes, but offers the most savings
— up to $3000.

Quebec:
You may receive a rebate of up to $2000, depending on when you purchased
your car. The rebate is only applicable to certain models and years, and the
end dates is January 1, 2009.

The bottom line: some models won’t qualify for any money back, while
others will qualify for both provincial and federal rebates (that’s a
potential savings of $3000 – $5000). The rebate depends on the purchase price
and amount of tax paid (if any). However, many of these programs are open to
other fuel efficient cars, so the savings aren’t for hybrids alone.

Ownership costs

Without rebates, it may take years for gas savings at the pump to equal the extra initial cost. However, purchase price isn’t the only consideration. In order to get an accurate picture experts argue that you have to look at the total cost of ownership over a given period of time. This cost takes into account other factors such as in fuel, maintenance and repair, depreciation and insurance. Some models that have a lower purchase price also have lower gas mileage.

Manufacturer websites are quick to point out that hybrids don’t need
any special maintenance, and that overall maintenance costs are similar to traditional
gas engines. However, the warranties may be longer on the hybrid components
— which could save repairs costs in the future.

In addition, hybrids tend to hold their value well, according to Yahoo!
Green. That’s good news for people planning to sell after a few years.

When it comes to insurance, Kanetix.ca admits that companies don’t have
a lot data about the costs of repair and frequency of theft, so overall trends
are not yet established. Insurance may be higher or lower depending on the model.
However, the company is optimistic that Canadian insurers may follow suit with
their American counterparts and start offering a 10 per cent discount. The reason:
hybrid drivers are thought to be a lower-risk group.

Will a hybrid be cheaper in the long run? Online data can be contradictory,
and a lot depends on the driver and the car. The benefit of lower emissions
can’t be quantified.

Should you wait?

If you’ve been watching the news lately, you may have already heard
of the latest trends: plug-in hybrids, electric cars and hydrogen fuel cells.
In fact, experts estimate that within the next twenty to fifty years, alternative
technologies will become the norm. But what about now?

As with any new technology, the longer you wait, the more advanced the technology.
Costs also tend to go down once the technology has been on the market for a
while. If you aren’t in the market for a new car right away, you’ll
want to keep an eye on upcoming trends or buy used. However, if you want to
take advantage of any rebates, you’ll have to act soon. While there is
constantly news about upcoming technologies, there is no word on future cash
initiatives to get people to buy green. The federal program is already predicted
to run over-budget.

Sometimes the numbers simply don’t matter as much. The “look and
feel” of the car is also important. The available space in the cabin and
trunk may also be a factor if depending on your needs. Curious shoppers can
take one for an extended test drive on their next road trip because many rental
car companies now offer a selection of hybrids.

In short, it’s best to do your homework and weigh the costs to determine
if a hybrid car is right for you.

Want more information? There is a wealth of information online. Start with
our references:

IntelliChoice.com Survey:
Hybrids Cost Less Than Peers Over Long Term — some interesting information
to help you determine overall costs.

Hybridcars.com —
features blogs, latest news, lists of cars currently available and upcoming
concepts.

Hybrid Cars Guide
— has links to many articles and information about hybrid cars.

Kanetix.ca Hybrid
cars in Canada: Will going green save you money?

MSN Money’s What
driving a hybrid will really cost you — outlines hybrids that do cost
more (based on U.S. data in 2007)

Go
green to save green

A
deal on wheels

Are
electric cars the way to go?