Hybrids Stuck in Neutral
Until hybrid prices come down, you’re better off buying a conventional auto. Pro or con?
Pro: Still a False Economy
Let me preface this missive by saying hybrids are wonderful technology and one of the best innovations we have seen in automaking in decades. The idea of saving fuel with hardware derived mostly from off the shelf is very smart.
But here’s why I don’t recommend them to most consumers. While they save fuel, they simply don’t save enough fuel. Even the new hybrid Toyota (TM) Camry—which costs only about $2,000 to $3,000 more than a conventional Camry, depending on options—saves $460 in gas a year if you drive the typical 15,000 miles and pay $2.50 a gallon. It would take four to six years to get your money back.
The Camry hybrid offers more value than most, since it’s engineered for fuel economy. But even the Camry hybrid has a tough time paying off. Also on the market are a slew of hybrids engineered—quite inexplicably—for power. The zippy Honda (HMC) Accord hybrid, billed as the fastest Accord ever, gets a less-than-impressive 27 miles per gallon from the Environmental Protection Agency’s latest testing. I drove it for a week and got 23 mpg. No wonder sales have dropped 60% this year. Toyota makes several Lexus hybrids that emphasize power over fuel economy, and they’re not selling well, either.
For a couple of decades, automakers have put technological advancements in engines, transmissions, and weight reduction to make bigger SUVs or faster luxury sedans. But fuel economy hasn’t improved nearly as much over the past 15 years. By using hybrid systems to burn rubber—as opposed to burning less gasoline—the carmakers have done the same thing.
Meanwhile, hybrids have generated so much hype that many consumers and policymakers are ignoring other fuel-saving solutions. Diesel gets the bum’s rush in the U.S. from all but a few Europhiles and a minority of automakers. The U.S. is ignoring new clean diesels because many people feel the debate has ended and hybrid technology has won the day. But ask Honda executives, who now see that hybrids are the solution for cars the size of a Civic or smaller. They now say diesel works best for the rest.
But it won’t be here in more models until the end of the decade. In the meantime, if you’re edgy over the bill at the pump, try downsizing. I drive a Mini Cooper S and get 27 mpg. I know, you can’t wedge your spouse and four children into a Camry, let alone a Mini. I hear this all the time. But the Census Bureau says the average family has 3.18 people. Most folks can trade their existing vehicles for something smaller.
Until gasoline gets a lot more expensive—thus enabling hybrids to earn their keep—or the technology gets cheaper, a smaller vehicle is the only way to save gas money without paying too much to do it.
Con: Ready to Accelerate
The market for hybrids is changing, yes. But rather than running out of steam, it’s edging closer toward the mainstream. A raft of new models and changes in the tactics dealers are using to sell more gas-electrics make now the best time to buy a new hybrid.
Practically speaking, hybrids still provide the best fuel economy. According to the EPA, the Toyota Prius returns 51 to 60 miles per gallon. The next-most-efficient midsize nonhybrid, the Nissan (NSANY) Versa, earns a paltry 30 to 34 mpg. The most efficient SUV on the market is also a hybrid—the Ford (F) Escape, which improves fuel economy by about 25% over its conventionally powered competitors.
Tax incentives—which can amount to upward of $3,000 on certain models—make most hybrids an ideal buy. At least 37 states plus the District of Columbia offer additional financial credits and perks for hybrid owners. (Credits are slated to be halved in April for Toyota’s vehicles, making March a good time to buy. But tax breaks for models from other makers will stay the same through the rest of the year.)
Consumers can enjoy a myriad of other perks as well. Many state governments permit hybrid vehicles in high-occupancy-vehicle (HOV) lanes even if the driver is alone. Some municipalities and private organizations provide free or reduced parking for hybrids. Many corporations now also provide cash incentives to employees who purchase a hybrid.
Still, some of the best dollars-and-sense deals on the market right now are hybrid cars. The Ford Escape Hybrid, Honda Civic Hybrid, and Toyota Prius all rank as best deals in their size class for the month of March, according to IntelliChoice. Edmunds.com reports that dealer incentives have shot up to an average of $2,000 per vehicle this month. In many cases, that means the premium consumers pay for a hybrid has dropped to just about $1,000.
That said, a car’s incentives don’t always need a dollar sign attached to them. Hybrids pump far fewer greenhouse gasses into the atmosphere each year than nonhybrids do. A Prius pumps nearly a 40% lower volume of harmful emissions into the atmosphere than the relatively efficient Mini compact does.
Gas prices, too, are on the upswing, getting primed for their seasonal rise. AAA recently reported that unleaded is up 32 cents per gallon this month alone. Buy a hybrid now, and you can leave gas-guzzling chumps in the dust when summer prices hit their peaks.