A couple years ago, Consumer Reports magazine conducted a study of the potential cost savings that could be realized by a number of hybrid vehicles then on the market, and compared those figures to the extra cost of the hybrid.
The conclusion: for the most part, payback on the extra premium for hybrids was several years away after purchase, if ever.
But that was then and this is now.
The price of some hybrids has come down; more hybrids are now available, in some cases at lower prices; additional purchase incentives are available in many areas; and perhaps most significantly, the price of gasoline has increased more than 50 per cent.
As a result, according to a recent study by the British Columbia Automobile Association (BCAA), several hybrids not only make sense, they make dollars and cents.
The auto club compared hybrid and regular gasoline model pairs. Studying the costs for all 13 hybrids available in B.C. over a five-year period, and factoring in fuel costs, that province's alternative fuel rebate program and the federal ecoAUTO Rebate Program, the analysis showed that in seven of the 13 vehicle pairs analyzed, the hybrids turned out to be cheaper overall over five years.
But there are differences between B.C. and Ontario, in terms of taxes and rebates, for example.
So we crunched the numbers in an Ontario context and came up with slightly different results.
(We also calculated fuel consumption on the basis of 55 per cent city/45 per cent highway driving, which is standard industry practice, rather than the 50/50 split BCAA used. We priced gasoline at $1.30/L, rather than $1.40.)
As in the B.C. case, seven of the 13 hybrid models showed a payback on total investment over the five-year period.
Those models included the Honda Civic Hybrid, Toyota Highlander Hybrid, Saturn Vue Hybrid, Toyota Camry Hybrid, Lexus RX 400h, Ford Escape Hybrid and Chevrolet Malibu Hybrid.
But wait! Where is the Toyota Prius?
It's not there, primarily because there is no non-Hybrid Prius to compare it too. The BCAA compared it to a Toyota Matrix, presumably because both are hatchbacks, but there is a $6,000 price spread between the two (even with Prius's recent $1,000 price cut), and that difference was just too much to overcome (although at $1.40 a litre gasoline, it would do so).
We, instead, compared it with a four-cylinder Camry, to which it is closer in interior size and function, although better equipped. In that case, it did show a payback – of $5,103!
That situation highlighted an important point when shopping for a hybrid. How much you can potentially save depends on what vehicle you compare it with.
In many cases, the hybrid packages come with a lot of features and equipment you may not want or need. In that case, even though the fuel consumption may not be as good with a lower-priced and less well-equipped model, you may ultimately save more by buying it and taking the savings up front.
By so doing, you may also be able to leverage those savings by financing a lower amount. For our calculations, to match the BCAA example, we assumed a 20 per cent down-payment with the rest financed at 9 per cent interest.
While there aren't many financing incentives out there on hybrids, you may be able to do much better than that on otherwise comparable models. And financing charges can make up a significant portion of your five-year costs.
The flip side of the analysis is that other hybrids – primarily higher-priced models with significant price premiums – did not.
As Trace Acres, BCAA's director of corporate communications and government affairs, writes on the association's website, "The price premium charged to own some higher-end hybrids won't be recovered regardless of the price of gas."
That said, consumers should be cautioned not to look at costs as the only determining factor in choosing a hybrid, Acres points out.
"We know from surveys that hybrid buyers are more likely to do so for environmental reasons than cost concerns," he writes.
In that case, buyers should also consider emission ratings as well as sticker prices. All hybrids are not created equal when it comes to emissions reductions.
Indeed, some hybrids are certified only to the same level of emissions certification (for smog-forming pollutants) as their non-hybrid counterparts, offering no significant improvement in that regard.
Unlike CO2 (a greenhouse gas), which is emitted in proportion to fuel consumed, smog-forming emissions are not directly dependent on the amount of fuel used.
One final point: A significant portion of the money saved with some of the vehicles in this analysis (up to $2,000) comes from the rebate provided via the the federal ecoAUTO Rebate Program, which is being phased out at the end of this model year.
So if you are considering a hybrid, this may be the time to buy.
Applications for the rebate on eligible vehicles can be submitted until March 31, 2009; but the rebate applies only to new vehicle purchases and 2009 model-year vehicles will not be eligible.
More details of the BCAA study can be found online at BCAA.com/Hybrids.
