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Monday, October 1, 2012

Is the Higher Price of the Hybrid Car Worth the Long Term Savings

By Amy Kitchel


While car makers have been touting new higher-efficiency versions of some of their more popular vehicle brands, tests show that it could take years for the average driver to realize enough cost savings on gas to make up for the higher price tag. Consumer Reports test tracks looked at a sample of these new, small, fuel-efficient vehicles and found that drivers expecting big savings on gas may be disappointed.

Most drivers would save about $20 per year when they upgrade to a Hybrid model compared to the standard version of the car according to the average results of the Consumer Reports study. While the most efficient cars in the study demonstrated savings for consumers of around $140 per year, those results were rare and involved unique mileage situations.

The added cost of the fuel-efficient technologies is so high that it would take the average driver many years - in some cases more than a decade - to save money over comparable new models with conventional internal-combustion engines.

In addition to the consumer reports test, a larger more comprehensive study done by the New York Times and truecar.com found that added technology does not necessarily equal added savings.

The average price to upgrade a car from its standard model to a Hybrid model or one with comparable fuel-efficient technology is $600. In this case, it would take much longer than the six years the average person owns a car before many of the cars could be expected to net savings. That is true at today's pump prices, around $4, and also if gas were to climb to $5 a gallon, the data shows. Indeed gas would have to approach $8 a gallon before many of the cars could be expected to pay off.

So why do some buyers pay more for advanced technology that might not save them money and why are these high technology cars touted as big money savers? Many consumers never do the math, analysts say, or they tend to overestimate how much the added miles per gallon translate into actual monetary savings. Some view the higher mileage as better for resale value, hoping to come out better on the back end.

Some consumers, on the other hand, simply view saving fuel and doing something better for the environment as their ultimate goals, regardless of cost. Some hybrid cars became a success in part because drivers wanted to drive, or maybe more importantly be seen driving, a hybrid car. Also, many simply want to drive a vehicle that consumes less gas, and they are willing to pay the premium for a hybrid to do so.

Ultimately, while hybrid or other fuel-efficient model cars do indeed boast higher mileage per gallon and will in the immediate save money each time you fill up your car, the extra cost of purchasing this type of car will take years to level out with the savings on gas.




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