Hybrid Cars: Not a Good Investment

CarGurus finds hybrid vehicles cost more to own than comparable gas-powered vehicles.

CAMBRIDGE, Mass., Sept. 10, 2010 -- CarGurus (https://www.cargurus.com/), a leading online automotive community, has determined that the majority of hybrid vehicles cost more to own and drive than comparable gas-powered vehicles. Based on the analysis of 45 hybrid cars which have similar non-hybrid, gas powered models, on average the Hybrid models cost 25% or over $2,200 more to own and operate than their non-hybrid counterparts.

Buying a new Hybrid carries with it a substantial cost premium over comparable gas-powered vehicles. Often time this cost premium can be quite substantial. In the 45 models studied, the average MSRP of hybrids was almost $6,400 more than that of their gas-powered counterparts. But the popular idea that hybrids actually cost less to own and drive via higher resale values and reduced gas expenses proved false in 76% of the cases examined. In the large majority of cases, the gas savings from hybrids did not overcome the substantial price premium paid at the time of purchase. Some Conclusions:

• High initial MSRP premium is bad - If you do want a hybrid, pick a model where the initial price premium over a comparable non-hybrid car or model is not significantly large. In this regard, some of the worst buys are Hybrid Trucks, namely the Chevrolet Tahoe Hybrid and the GMC Yukon Hybrid, which have MSRP premiums over their non-hybrid counterparts of over $10,000.
• High Gas Mileage differential is good – Look for Hybrids which have substantially higher gas mileage statistics than their non-hybrid counterparts. Along these lines, good hybrid investments found were Ford's Escape and Fusion Hybrids. In both cases, these cars benefit from a low MSRP price premium and substantial gas mileage improvements (of up to 50% higher) over their gas-only counterparts. In both cases these cars have a lower cost of ownership than their gas-only equivalent models.

"Hybrid cars really only make sense for consumers if the total cost of ownership – including the initial cost to purchase and the better gas mileage – outweigh that of a gas-only equivalent vehicle," remarked Langley Steinert, CEO/Founder of CarGurus. "Unfortunately, the vast majority of the hybrids we analyzed don’t fit this criteria. Consumers need to be careful not to overpay for a Hybrid in the form of higher MSRP pricing. Otherwise, that upfront investment at the time of purchasing the car won’t be recouped during the time of ownership even given the improved gas mileage of a hybrid."

CarGurus Hybrid Value Retention Analysis – Methodology

CarGurus looked at the total cost of ownership for 45 hybrid vehicles from the model years 2003 to 2010 that have similar non-hybrid versions. The total cost of ownership for the hybrid and non-hybrid models was compared for each vehicle to determine the total cost of ownership premium for hybrids. This total cost of ownership included the initial purchase price, lost value in terms of depreciation and total gas costs over the time period analyzed.

About CarGurus LLC

Located in Harvard Square, Cambridge MA, CarGurus LLC is an online automotive community founded by Langley Steinert, formerly Chairman and co-founder TripAdvisor LLC. CarGurus' founders, board, and investors bring a wealth of experience from such leading web companies as TripAdvisor, eBay, Expedia, and Yahoo. For more information about CarGurus visit us at www.cargurus.com.