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Consumer Reports Sizes Up Hybrid Costs

Savings at Pump Don't Offset Higher Purchase Price

March 3, 2006

• Drivers Wanted: Mini Developing Electric Model • GM Invests In Electric Car Engine Plant • GM Increasingly Viewed As "Green" By Online Consumers • Honda Plans New Hybrid for Earth Day 2009 • Hybrid Technology a Presidential Campaign Issue --- • More ...

For consumers who believe that gas/electric hybrid vehicles will save them money, the picture hasn't been so clear. Hybrid vehicles are more fuel efficient and produce lower emissions than conventional gasoline-only vehicles.

Most current models of hybrids also score well in Consumer Reports' testing and are highly rated in CR's annual reliability and owner satisfaction surveys. But do hybrid vehicles really hold the potential to save the consumer money over the long haul?

To find the answer, Consumer Reports looked at all of the major ownership costs and financial benefits of six different hybrid vehicles -- a mix of sedans and sport-utility vehicles (SUVs).

In Consumer Reports' analysis, none of the six hybrids tested recovered its price premium in the first five years and 75,000 miles of ownership. In fact, the extra ownership costs over five years for those vehicles ranged from $3,700 to $13,300.

Even when the analysis was extended to a period of 10 years and 150,000 miles, it was not possible to recover the price premium for a hybrid vehicle.

Consumer Reports also found that the benefits and costs of hybrids vary significantly, depending on the model. Because of the wide range of hybrid vehicles available, it's especially important for consumers to look carefully at all aspects of the vehicle before buying.

The 2006 model year vehicles examined are the: Ford Escape Hybrid AWD, Honda Accord Hybrid, Honda Civic Hybrid, Lexus RX400h AWD, Toyota Highlander Hybrid Limited AWD and the Toyota Prius.

The full report, titled "The dollars & sense of hybrids," is published in Consumer Reports' Annual April Auto Issue, which goes on sale beginning Tuesday, March 7.

The rising price of gasoline and concern over U.S. dependence on oil have generated a lot of interest in hybrids, and with good reason. They typically deliver the best fuel economy in their classes. The most fuel-efficient models can save the consumer about $660 in gasoline costs. Hybrids also emit less pollution.

Each gallon of gasoline not burned prevents the emission of 19 pounds of carbon dioxide, which many believe contributes to global warming. In some states, hybrid owners can even use special carpool lanes regardless of the number of occupants in the vehicle.

These benefits add up to an inviting package for many car buyers who are willing to pay a premium for a hybrid.

But for those who are considering buying a hybrid for purely financial reasons, the figures just don't add up.

Estimating the Total Ownership Costs

To estimate the various overall ownership costs of hybrids, Consumer Reports picked six current models that it had previously tested and totaled their major costs and savings over the first five years, the longest period for which reliable data on all the cost components are available.

Five years is also a typical period of car ownership. CR did the same thing for each model's closest conventional, gasoline-powered equivalent and then compared the two. (For its investigation, Consumer Reports assumed that all the vehicles were purchased in California, the leading market for hybrid sales.)

Consumer Reports factored the following into its calculations: the purchase price premiums for hybrids, the difference in sales tax, savings from hybrid federal tax credits, fuel savings from hybrids at the pump, the extra cost or savings in insurance premiums for hybrids, the extra maintenance cost or savings from hybrids, the extra depreciation cost, and extra financing cost.

After factoring in federal tax credits and fuel savings that are based on gas prices rising to $3 and then to $4 a gallon, CR's calculations show that the most cost-effective hybrids, the Honda Civic Hybrid and Toyota Prius, still cost $3,700 and $5,250 more than their all-gas peers (the Civic EX sedan and Corolla LE sedan, respectively) after five years.

Models with the highest cost difference -- the Honda Accord Hybrid, Lexus RX400h, and Toyota Highlander Hybrid Limited -- ranged from $10,250 to $13,300 more.

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