"It's Not Just the Gas, Stupid!"

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To go hybrid or not to go hybrid. That is the thought on the minds of many American car buyers thus far in 2008. Well beyond the environmental and emotional benefits of hybrid ownership is the clear issue that the current crop of hybrid vehicles cost varying degrees more to purchase than their non-hybrid versions or competitors--the hybrid premium, if you will. Much more than a simple trim level option, the hybrid version of many vehicles is a technological masterpiece that would not have been available for purchase by governments or universities let alone your next-door neighbor just ten years ago. This level of sophistication is expensive.

As a result, for many shoppers this cost/value equation is a major consideration when evaluating a hybrid vehicle. The role of third-party automotive resources like IntelliChoice.com, Edmunds, Consumer Reports and others is to help buyers sort through the facts and fiction and make certain that this balance will work in their favor. But recent announcements and analyses from many of these sources come up woefully short on providing the full story.

The most common mistake is to justify or refute the economics of hybrid ownership by calculating the assumed gallons of fuel a vehicle will consume per year at an assumed price of fuel over an assumed number of years. But we too often forget that gas is just one cost of owning a car or truck. Factors such as depreciation, resale value, maintenance, repairs (outside of warranty), and insurance are all costs that accumulate as soon as you drive the vehicle off the lot...and they are very distinct and separate from your agreed monthly payment if you financed the vehicle.

And this is where hybrids shine. The overall cost of owning a hybrid is, in a majority of cases, much more attractive than the cost of owning the non-hybrid equivalent when you factor in ALL of the real ownership costs. Have a look at IntelliChoice.com's recent annual Hybrid Survey to see what we mean. There will be plenty of other surveys and studies coming out over the next weeks and months that purport to determine hybrids as either good or bad for your wallet. The answer is--it depends on the model you're looking at. But one thing is certain: If you see studies from reputable sources that only look at gas, you're not getting the complete picture.

Posted on 2008-07-02 | Permalink | |

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