Business

HIGH GAS CLOSES HYBRID GAP

The Toyota Prius, the country's top-selling hybrid car, sells for an average $22,939, compared with $19,231 charged for its gas-powered cousin, the Camry. But the Prius also drinks less gasoline – which now tops the $4-a-gallon mark.

Herein lies the consumer conundrum. Which is the better deal: The more expensive car that is cheaper to operate, or the less-expensive car that drinks more gasoline?

It's the Toyota Prius – but only if the buyer keeps the car for longer than three years, according to Edmunds.com, a Web site with resources for car buyers. In the Prius vs. Camry example, it takes three years for the hybrid's fuel savings to pay back the premium paid to buy the Prius instead of a comparable gas-powered car.

The Prius example comes from the latest study released by Edmunds that determines the length of time it takes to recoup the premium paid on costlier hybrids. The findings: The rising price of gas is making hybrids more financially attractive by reducing the amount of time required for fuel savings to pay back the so-called hybrid premium on many models.

In addition to the Prius, analysts found that the Nissan Altima, General Motors Corp. Yukon, Toyota Camry and the Mercury Mariner were among hybrid vehicles that offered relatively quick paybacks.

Of course, many consumers seek hybrids for environmental reasons that, to them, outweigh the sticker price. But strictly from a cost standpoint, the hybrid isn't always the best bet. Some models still have such big price premiums or modest mileage improvements that buyers ought to think carefully before buying. These include the hybrid versions of the Toyota Highlander, Chevrolet Malibu, Saturn Aura and the ultra-luxury Lexus LS600H.

“There are really only a handful of hybrids that may be good financial propositions for most consumers right now, and the Prius is one of them,” said Jesse Toprak, executive director of industry analysis for Edmunds.com.

Edmunds' calculations focused on the cars' sticker prices – comparing the amount paid for a hybrid model over a gas-engine version of the same model, if available. Then analysts factored in rebate offers on the vehicles, the gas mileage in both city and highway driving and, of course, the price of fuel. Also included in the calculations were federal tax credits, which can reach up to $3,000. The calculations do not account for differences in costs for repairs and replacement parts, for example; nor do they factor in varying costs to insure vehicles.

Even so, the hybrid option is a better proposition with regard to payback than when gas cost $2 and $3 a gallon, said George Pipas, sales analyst for Ford Motor Co.

That should help drive sales in the same way it has helped drive sales of small cars. “It was always the case that as economics made it more favorable, that demand would grow and go beyond those that were just curious or early adopters,” Pipas said.

Consumers, Pipas said, need to evaluate their needs. They may find that a fuel-efficient, four-cylinder car may be a better route. “With a higher price of gasoline, it becomes a better proposition for the consumer depending on the kind of driving they do,” he said. “That is one of the big things that is hardly ever mentioned. What kind of driving does the consumer do.”

Martin Ball of Yonkers, N.Y., is looking to trade in his Jeep Commander SUV and buy something that gets better gas mileage. Among the cars on his shopping list are the Nissan Altima hybrid sedan and the Lexus RX400H, also a hybrid.

Ball, whose wife also drives an SUV, is leaning toward the Altima, partly because he finds it aesthetically appealing.

“We're looking to get away from having two SUVs because of gas prices,” Ball said. “We're thinking of keeping her SUV and having a car. I'm considering the Nissan Altima because of the way it looks and its price. It still looks like a car, and it gets good gas mileage.”

The Nissan Altima hybrid paints a tempting picture, offering a payback in nearly four years. Buy an Altima hybrid and you get a $2,350 tax credit, which lowers the typical price premium on the hybrid compared to the standard Altima to $1,879, according to Edmunds. The hybrid gets 35/33 mpg in city/highway driving, better than the 23/31 for the gas version, for a savings of $499 if driven 15,000 miles per year.

The Toyota Prius, the country's top-selling hybrid car, sells for an average $22,939, compared with $19,231 charged for its gas-powered cousin, the Camry. But the Prius also drinks less gasoline – which now tops the $4-a-gallon mark.

Herein lies the consumer conundrum. Which is the better deal: The more expensive car that is cheaper to operate, or the less-expensive car that drinks more gasoline?

It's the Toyota Prius – but only if the buyer keeps the car for longer than three years, according to Edmunds.com, a Web site with resources for car buyers. In the Prius vs. Camry example, it takes three years for the hybrid's fuel savings to pay back the premium paid to buy the Prius instead of a comparable gas-powered car.

The Prius example comes from the latest study released by Edmunds that determines the length of time it takes to recoup the premium paid on costlier hybrids. The findings: The rising price of gas is making hybrids more financially attractive by reducing the amount of time required for fuel savings to pay back the so-called hybrid premium on many models.

In addition to the Prius, analysts found that the Nissan Altima, General Motors Corp. Yukon, Toyota Camry and the Mercury Mariner were among hybrid vehicles that offered relatively quick paybacks.

Of course, many consumers seek hybrids for environmental reasons that, to them, outweigh the sticker price. But strictly from a cost standpoint, the hybrid isn't always the best bet. Some models still have such big price premiums or modest mileage improvements that buyers ought to think carefully before buying. These include the hybrid versions of the Toyota Highlander, Chevrolet Malibu, Saturn Aura and the ultra-luxury Lexus LS600H.

“There are really only a handful of hybrids that may be good financial propositions for most consumers right now, and the Prius is one of them,” said Jesse Toprak, executive director of industry analysis for Edmunds.com.

Edmunds' calculations focused on the cars' sticker prices – comparing the amount paid for a hybrid model over a gas-engine version of the same model, if available. Then analysts factored in rebate offers on the vehicles, the gas mileage in both city and highway driving and, of course, the price of fuel. Also included in the calculations were federal tax credits, which can reach up to $3,000. The calculations do not account for differences in costs for repairs and replacement parts, for example; nor do they factor in varying costs to insure vehicles.

Even so, the hybrid option is a better proposition with regard to payback than when gas cost $2 and $3 a gallon, said George Pipas, sales analyst for Ford Motor Co.

That should help drive sales in the same way it has helped drive sales of small cars. “It was always the case that as economics made it more favorable, that demand would grow and go beyond those that were just curious or early adopters,” Pipas said.

Consumers, Pipas said, need to evaluate their needs. They may find that a fuel-efficient, four-cylinder car may be a better route. “With a higher price of gasoline, it becomes a better proposition for the consumer depending on the kind of driving they do,” he said. “That is one of the big things that is hardly ever mentioned. What kind of driving does the consumer do.”

Martin Ball of Yonkers, N.Y., is looking to trade in his Jeep Commander SUV and buy something that gets better gas mileage. Among the cars on his shopping list are the Nissan Altima hybrid sedan and the Lexus RX400H, also a hybrid.

Ball, whose wife also drives an SUV, is leaning toward the Altima, partly because he finds it aesthetically appealing.

“We're looking to get away from having two SUVs because of gas prices,” Ball said. “We're thinking of keeping her SUV and having a car. I'm considering the Nissan Altima because of the way it looks and its price. It still looks like a car, and it gets good gas mileage.”

The Nissan Altima hybrid paints a tempting picture, offering a payback in nearly four years. Buy an Altima hybrid and you get a $2,350 tax credit, which lowers the typical price premium on the hybrid compared to the standard Altima to $1,879, according to Edmunds. The hybrid gets 35/33 mpg in city/highway driving, better than the 23/31 for the gas version, for a savings of $499 if driven 15,000 miles per year.

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