Cost-Effective Hybrids

Cost-Effective Hybrids

NEW YORK (MainStreet) — Drivers attracted to hybrids have long faced a nagging question: Is a hybrid really cheaper to own once the fuel savings are compared with the premium paid for the car?

Over the years, studies have increasingly answered "yes," often because that premium has inched down while fuel prices have gone up. But the analysis includes a lot of assumptions that may not match the car owner's experience — fuel costs, miles driven per year and the number of years the vehicle is kept.

A study by Vincentric, a compiler of cost-of-ownership data, found that 13 of 33 hybrids are cheaper to own than their counterparts with standard engines. That's two more than in last year's study, but because there are more hybrids this year the percentage of cost-effective models fell to 39% from 44%.

Some of the most cost effective were high-end hybrids such as the Lexus CT200h, which was $6,300 cheaper to own than its all-gas sibling. But overall it cost $1,338 more to own and operate the average hybrid over five years, assuming 15,000 miles of driving per year.

Vincentric looks at eight factors, including depreciation, financing, fees and taxes, fuel costs, insurance maintenance, repairs and opportunity cost, which is the value of alternative uses for the buyer's money.

Also see: Year-End Tax Advice: Essential 2013 Knowledge

So how would you fare with a hybrid?

The most important issue is the premium you'd pay for a hybrid versus the cost of fuel. If you believe gasoline prices will stay high or go up, and if you drive a lot, the savings may be large enough to make the vehicle pay. Vincentric used average fuel prices over the five months before the study.

Lower gas prices mean less savings. No one knows exactly what gasoline will cost down the road, but many experts think new oil sources in the U.S. and Canada will keep gasoline from skyrocketing and could even bring prices down.

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