Hybrids, the cars that give back

Marketplace Staff Jan 12, 2007

KAI RYSSDAL: People have been driving hybrid cars for a couple of years now. They’re better for the environment. They use less gas. But as for saving the owner’s money? Most surveys so far have said fuel savings were outweighed by a higher sticker price. But a new study by intellichoice.com might give hybrids another chance. James Bell’s the publisher of the web site.

James, what did you find about hybrid cars?

JAMES BELL: When the hybrids started to become more and more popular, we basically applied the process that we’ve been doing to the hybrids. We referenced some of the other reports and analysis that’s come out from other places. We think that they’re kind of doing the hybrid buyers a bit of a disservice because they’re only really discussing the fuel cost element. But it’s when you look at the maintenance cost, the repair cost, the insurance cost and most importantly, the resale value and the depreciation rate–that’s where the hybrids really start to stand out from a cost of ownership perspective. And this is all besides the fact that you’re doing the right thing for the environment and saving some money from the gas station as well.

RYSSDAL: Yeah, so what you’re saying is that unlike with a regular new car, you know you drive it off the lot and it loses X percent of its value, you’re saying that doesn’t really happen with hybrids?

BELL: Well it does. I mean, no vehicle, other than maybe a Ferrari is going to actually appreciate. All vehicles are going to lose some of their money right away. Of all the vehicles the hybrids are doing that the least. So, you know, for the average consumer, if the vehicle they’re looking at has a hybrid option, it should definitely be in their consideration.

RYSSDAL: Did you guys factor in the tax breaks that you get with hybrids?

BELL: Oh, absolutely, yeah.

RYSSDAL: And we need to point out that the tax break for the Prius, specifically, has gone away.

BELL: Well that’s right. The break was all based on the volume of vehicles sold. So unless you purchased one in probably — in the first seven to eight months of 2006, the credit is much reduced.

RYSSDAL: Yeah. The Prius, of course, is the one we all talk about because it’s been around the longest. But what about Ford and General Motors? I mean they’re starting to come out–they have come out already with some cars. Does your analysis hold true for them as well?

BELL: We’ve noticed that the Chevrolet Silverado hybrid which is what they call a mild hybrid in that it doesn’t really run on electric power alone, it’s just an electric assist. It still delivers a better cost of ownership score over five years than the rest of the group. So wherever there’s a segment that the hybrid exists, the hybrid rises to the top of the table.

RYSSDAL: What about now, the one at the Detroit Auto Show this week, the Chevy Volt? How is that different from, you know, the hybrids we’ve come to know and love? And what are your thoughts on the value that those will retain?

BELL: Oh, I think the Volt is tremendous. In fact, it’s really hard to believe this, but General Motors has really grabbed the hybrid needle away from Toyota and swung it hard into the future. And the primary difference is that the gasoline engine that resides there is only used as an electrical generator. It’s a fully electric vehicle in that respect — a golf cart, if you will, that has its own built-in generator. And the first 40 miles then you drive the next day, the gasoline engine never turns on. When you go past that 40-mile line then, the gasoline engine will turn itself on to keep the batteries charged up. Conceptually, you would never need to visit the gas station.

RYSSDAL: And your guess would be that when it eventually comes to market, the Volt will hold its resale value much as regular hybrids do today?

BELL: I would think so. I mean the fact that the Prius is really the king of our group here, mainly because it is unique. It holds its value exceptionally well and it delivers some of the best fuel economy. All those factors are all going to be trumped by the Volt.

RYSSDAL: James Bell, is the publisher of intellichoice.com. Mr. Bell, thanks a lot for coming on.

BELL: It’s a pleasure. Thank you very much.

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