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Hybrids the Real Payback

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Comments

  • terry92270terry92270 Member Posts: 1,247
    When at a loss, blame the rich? :P

    Hybrids, like the Camry and Prius, cost no more than the LX or LXE editions that hundreds of thousands are buying every year. And the price keeps going down, the premium the public pays for one. EV technology is advancing at such a rapid pace, I see non cart-like ones at dealerships within the next 5 years.

    I hardly think it is the "wealthy" buying Hybrids. And the available data reflects that. Mostly middle class people. And the retired, fixed income set.

    But I do see lots of hourly wage earners, who most consider low-income people, like Bell men at hotels, and valet car parkers, driving top of the line, leather seated, chrome wheeled Altima's, Maxima's, and the like. Those cost thousands more than a Prius.

    All automobile purchases are net losses. If one can pay a couple of thousand more, save on gasoline, and have it, after five years, cost them no more than a ICE, and save 70% of the emissions, that is hardly a financial burden. ;)
  • zodiac2004zodiac2004 Member Posts: 458
    I grew up in the automobile industry, but perhaps you have stumbled upon some new knowledge I know nothing about. Anything is possible, they say

    You are saying you grew up in the industry - so tell me what represents a bigger profit for a typical high-volume dealership - is it the new car sales or used car sales or their service department?
    If you can put percentages to each, what would you put?
    I'm talking profits - not gross volume.
  • daysailerdaysailer Member Posts: 720
    Blame? No blame implied or intended. If someone has the resources to commit tens of thousands of dollars based on ideals, emotion or the phase of the moon, more power to them. I do not, however, think that describes a majority of the auto market.
  • gagricegagrice Member Posts: 31,450
    Toyota's own website puts the demographic for the Prius at $85k per year income. I don't consider that the average working family. We have hashed this a couple years ago. The average family income according to the Bureau of Labor statistics for 2002 was $36k per year. The Prius is bought according to Toyota by people making over double the average US income. So I would agree they are for the wealthier folks in the USA. As does this University study.

    “Hybrid car drivers have a level of education higher than any group of car drivers that I’ve ever seen,” says Walter McManus, director of the Office for the Study of Automotive Transportation at the University of Michigan. McManus further describes these drivers:

    They have higher income, much higher than the average car buyer—approximately $100,000 a year

    http://www.bls.gov/cew/state2002.txt

    http://stats.bls.gov/news.release/empsit.t16.htm
  • tpetpe Member Posts: 2,342
    New technologies are almost always adopted by the more affluent first. Prices typically come down and these products become accessible to the masses. I personally am not interested in a hybrid but I believe that they are furthering technology that will be used in EVs, which I am interested in. So to that extent I appreciate the people supporting hybrids. The idea that these people are spending 10's of thousands extra is somewhat of an exaggeration on daysailer's part.
  • terry92270terry92270 Member Posts: 1,247
    Everyone here needs to expend a bit more energy actually reading posts, instead of jumping in to answer about something that was never said. ;)

    A poster had accused the manufacturer not the dealer, of milking warranty work, etc.

    What I said was manufacturers don't derive extra income from warranty work. Does that explain my post better :confuse:
  • gagricegagrice Member Posts: 31,450
    I personally am not interested in a hybrid but I believe that they are furthering technology that will be used in EVs,

    I kind of disagree. EVs were coming along fine until the rug was pulled out from under them. Someone in power decided that hybrids would be a better compromise and not cut out the oil companies completely as EVs were poised to do. Hybrids have used existing technology much of which came from EV research. HSD is from a marine hybrid design. NIMH was a result of GM building the EV-1. so in essence the hybrid set us back a quite a few years with its compromise with the oil companies. The first hybrid being tested was a Chrysler diesel hybrid. It was a 70+ MPG vehicle that Chrysler scrapped. Chrysler could not believe people were gullible enough to pay the premium.
  • daysailerdaysailer Member Posts: 720
    Your figures for the Prius are consistent with my long held opinion that a reasonable cost for a vehicle does not exceed ~25% of annnual gross income.
  • gagricegagrice Member Posts: 31,450
    I agree. It amazes me the creative financing these days that throws all economic wisdom out the window. I think we are headed for a BIG crash. People are buying cars and houses so far above their means. One blip and it is all gone.

    If you buy your first car and keep it 10 years. You make payments to the creditor the first 5 years and to yourself the last five years. Then you never have to pay interest on a car again. And you have money in the bank for that rainy day.
  • tpetpe Member Posts: 2,342
    The 4 cyl Toyota Camry is close to $20k for the base model. Meaning that would be an impractical purchase for someone making less than $80k per year. Even a new Corolla would be an extravagance for most. The impact on an individual's finances is based on the cost to operate. I've read numerous reports that with cars lasting longer and requiring fewer repairs the actual cost to own the average vehicle is less than it was in the 70's.

    Granted the gas savings typically does not pay for the hybrid premium. So what? Does the upgraded sound system, alloy wheels, sun roof, etc... pay for themselves? Its all about the individual assigning value to a feature. If an individual values saving gas beyond the purely monetary level that is no more irrational than paying extra for most of the other options that a vehicle can be equipped with.
  • daysailerdaysailer Member Posts: 720
    Agreed. I've not purchased a vehicle on credit in >30 years.
  • daysailerdaysailer Member Posts: 720
    Is that to say that if you have already made irrational decisions, a few more don't matter?
  • tpetpe Member Posts: 2,342
    Is that to say that if you have already made irrational decisions, a few more don't matter?

    I don't think that is an accurate interpretation because I didn't state any of these decisions were actually irrational. I stated paying extra for a hybrid was no more irrational. There's a difference. But I'll go along with your logic, which means you agree that these other options that a vehicle can be equipped with represent irrational purchases.
  • gagricegagrice Member Posts: 31,450
    Any option other than walking, riding a bike or the bus is irrational if it is not purchased on a firm financial foundation.
  • zodiac2004zodiac2004 Member Posts: 458
    Everyone here needs to expend a bit more energy actually reading posts, instead of jumping in to answer about something that was never said

    And so should you.
    Re-read post#21 - which was my first response to your post - which I started off by saying
    "You are right - it's not very profitable for the manufacturers".
  • terry92270terry92270 Member Posts: 1,247
    You are right - it's not VERY profitable for the manufacturers.

    But the service department represents 90%+ of the total profits of a new car dealership. This allows manufacturers to take a much higher percentage of each new car's price for themselves. That's why the dealerships still stay in business and make profit.
    Get it. If not you need a course in car business 101 - nothing to do with economics.

    Yes, I read where you got snippy, once before, and said all this had nothing to do with economics.

    What purpose does your posting about this once again serve? I responded to a statement that was made saying MANUFACTURERS loved doing warranty work, because it made them rich.

    My post merely said that was incorrect because it was dealers, not NISSAN or TOYOTA, whatever manufacturer, didn't make money on warranty work.

    You either agree or disagree that MANUFACTURERS love making warranty repairs, or you don't. You have made up some argument out of nothing. Everything to do with buying and selling; service, purchase, maintenance of anything, anywhere, is economics, btw. ;)

    There isn't any conspiracy, as some suggest. We are all free to have warranty work done at shops other than those of dealers. In most locations service prices are what they are due to Union workers, expensive equipment and general overhead. I am not saying, never once said, that DEALERSHIPS don't make money off of service. You have somehow taken my one statement about MANUFACTURERS not making money off warranties, and run it into a rant about DEALERS.

    Please, lets move on.
  • tpetpe Member Posts: 2,342
    I don't know. I just bought a 50" plasma TV. I don't regret this decision at all but there is no way to justify it from a rational or practical perspective. Life would be pretty bland and boring without occasionaly doing things for no other reason than we want to.
  • terry92270terry92270 Member Posts: 1,247
    Some people cannot justify, in their minds, purchases for anything besides the basic necessities of life.

    In my mind, since I work damn hard to get the money I do, ANYTHING I want, insofar as electronics, that brings me pleasure or entertainment, is always a rational decision. So long as it doesn't infringe upon others, or is a safety issue.

    We are getting away from the thread topic here in discussing wide-ranging psychological and life-style issues, no? ;)
  • Kirstie_HKirstie_H Administrator Posts: 11,148
    by each other, let's get back to hybrid vehicles, and the payback they may offer, OK?

    Nitpicking needs to stop.

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  • daysailerdaysailer Member Posts: 720
    there has not been a payback identified that is not a "lifestlye" or otherwise intangible issue. Can anyone quantify the value of reduced emissions or oil imports which acrue to the buyer as a result of an individual vehicle purchase?
  • transpowertranspower Member Posts: 213
    None of you guys here have applied Edmunds' True Cost to Own to the situation. So here goes. Consider a 2007 Mercury Mariner Hybrid (with all options) against a 2007 Mercury Mariner V-6 (with all options). With financing, the Hybrid will cost $46351 over five years according to TCO vs. $44803 over five years for the V-6. Without financing, the Hybrid will cost $39761 vs. $39535. The difference here is a measly $226. But suppose that we include time lost at the gas station and assume that time is worth $1/minute and that a fill-up takes 8 minutes. If there is one less fillup per month with the Hybrid, then after 29 months, the Hybrid becomes the winner (if you're not financing). Even with financing, the difference in favor of the V-6 is only 2 cents/mile. And: we're just considering costs here--there is still the benefit side in a cost to benefit ratio of using less foreign oil and a cleaner environment.
  • highenderhighender Member Posts: 1,358
    I cannot quantify such a nebulous but important thing such as doing ones part for cleaner air, and less usage of gasoline, and I do not think anyone can place a dollar or cents on that, and even if they did, the resulting figure would be debatable.

    I am all for the Prius, as many of you know. I think it is great that it uses less gas. Today, right now, the top story on Yahoo site is the 10 most fuel efficient vehicles ...with Prius hybrid being number one.

    However, I do admit that it costs more energy and gasoline and other nonrenewable resources, to make the hybrid in the first place. Plus , at the end of the lifespan of the car, it would cost more energy to properly dispose of the car , than say a regular car.

    They have to bring the price down, so that more needy folks, the commoners, the blue collar and working class, can afford such a vehicle....IMHO.

    I considered the hybrid...but could not stomach the price differential compared to a non hybrid, so I went diesel.

    I think hybrids are good....but we should also encourage completely electric vehicles and other vehicles that run on renewable fuels...
  • highenderhighender Member Posts: 1,358
    Are you saying that the cost of a hybrid like the PRius is about the same as a similar sized NOn hybrid vehicle like the corolla ? I do not think so.

    A small car ( Prius sized) can be had for under $18,000, but even a used Prius goes over $24,000 !! True cost to own is way up there...

    plus if you add in time saved by not going to the gas station, then you should also factor in time wasted to change the batteries, cost of new batteries, cost of society to properly recycle those batteries, etc....

    just my opinion....

    please show me why I am wrong.??
  • harvey44harvey44 Member Posts: 178
    Or you might value saving time filling up, or waiting in line, if gas becomes scarce.
  • terry92270terry92270 Member Posts: 1,247
    From what I have read in these forums, people are indeed purchasing Hybrids of all kinds at about $2500-$3000 over their ICE counterparts. This isn't what Edmunds says, but actual buyers posting their deals.

    This surprised the hell out of me, but when you think about it, most of the Hybrids, especially the Camry and Highlander, are equipped at the same level as the ICE top-of-the-lines. Until I saw what they were paying, I had always assumed, based upon what I had read, that the premium for them was much larger....
  • gagricegagrice Member Posts: 31,450
    I just priced out the 2007 Mariner hybrid and V6 both loaded to the max. Mariner hybrid with a $1000 factory rebate is $34,859. The non hybrid 4X4 Mariner V6 with a $2000 factory rebate is $25,911. That is a premium of $8948. All the quantitative analysis in the world cannot make that Mariner hybrid a good deal. With real world mileage on the hybrid 25% better than the non hybrid you would have to keep that car into the next century to justify its purchase with gas mileage alone. I am not sure how Edmunds managed to get as close as they did on their TCO. Lots of fudging in favor of the hybrid I would assume.

    Payback on Mercury Mariner Hybrid= NEVER or 344,153 miles whichever comes first.
  • terry92270terry92270 Member Posts: 1,247
    I really have no idea, except to say I would have to think long and hard before I again buy a Ford anything. Or GM. Or Chrysler. :P

    What I was posting about was Toyota's, in their prices paid threads here.

    I can't really see any purpose in just posting again and again, that you beleive there isn't any justification or payback in buying a Hybrid. I think everyone got your point. ;)
  • gagricegagrice Member Posts: 31,450
    My response was to the poster that was trying to show that there was very little premium in a Mariner hybrid.
  • transpowertranspower Member Posts: 213
    Edmunds uses $33161 as the cash price for the Hybrid, and $27308 for the V-6, both loaded. Run the analysis for yourself. Also, I'm not really convinced that depreciation will be greater for the Hybrid. If gasoline prices go up, then the value of a used Hybrid should go up. And, by the way, so far the Mariner and Escape Hybrids have had very low maintenance expenses. I've never bought a Ford, Mercury, or Lincoln before, but I really would like to buy American this go-around.
  • explorerx4explorerx4 Member Posts: 19,304
    my sister has a prius and fits the highly educated deomgraphic (she has a phd). she makes maybe 5-6k a year.
    her husband otoh, a bit more. :)
    to me, it should be compared to the camry, not a corolla unless the only criteria is a driver only for commuting.
    2023 Ford Explorer ST, 91 Mustang GT vert
  • terry92270terry92270 Member Posts: 1,247
    They compare vehicles that are close in size/weight.
  • freshautosfreshautos Member Posts: 1
    Here are some points I think many are missing on the benifits of hybrids

    1. The media machine, somehow made people think hybrids will have greater depreciation than non-hybrids, when the opposite has shown to be true, and a lower depreciation rate is very important to the value/price equation of the car.

    2. Batteries have a life of at least 150,000 miles, if not more, before you reach that point however, your going to want to covert your hybrid to a plug in, and you are going to swap out the battery pack anyway, this is only going to cost you $3000 for this new plug in li-ion battery pack(once it is mainstream), it'll be an upgrade, that will pay it self off quickly

    3. The gas these cars are saving may not on paper show a payback for the purchaser, however it is very close with tax breaks, and reduced depreciation. But the fact that these cars are saving millions of gallons of gas is causing a reduction in demand for oil, which in turn depresses gas prices for EVERYBODY, not to mention less money going towards oil controling countries, and least of all the thing everybody dreds, clean air.

    4. It is a fact that hybrid batteries are 100% recyclable

    I think these 4+ points are enough to take into consideration for this post. I, myself do not own a hybrid, I will not buy a new car until it is an american hybrid that gets 50 MPG combined, and has the looks and utility that I desire at that time, or a full electric. In the meantime I'll drive old reliable used cars that barely contribute to the auto industry (only the autoparts industry benifits, and oil companies of course) But I won't support companies that won't deliver what I want at the price I want. Vote with your dollars, they speak the loudest.
  • daysailerdaysailer Member Posts: 720
    votes with their dollars, whether they intend to or not.
    Unfortunately, we have a poorly informed, unthinking, and emotional electorate.
  • tpetpe Member Posts: 2,342
    Good points. I hope you're right about the $3k Li-ion battery pack.

    The problem with plug-in hybrid conversions is that they were not originally designed with this in mind. While you can upgrade the battery pack and change the software the electric motors are still going to be rather anemic as a primary source of power.

    I'm waiting for an all EV and I agree, vote with your wallet. The problem is that my candidate isn't on the ballot.
  • gagricegagrice Member Posts: 31,450
    Welcome to the Forum,
    I think you have made it clear that the payback for you is not enough to get into your wallet.

    I think that the Li-Ion battery situation is far from being realized. The major player in plug in hybrids is CalCars. They are still not selling the $12k packages promised in 2004. They are evidently in financial difficulty as they are asking for donations to keep afloat. There is nothing that would lead me to believe that you will ever see a plug-in hybrid with only a $3k premium. Even the $12k add on only gained you 30 miles at under 34 MPH.

    A simple EV is more likely to become mainstream than a PHEV. I don't think it will be built in America. Keep voting with your Dollars. That makes the most sense. Keeping an older car running good is the most environmentally friendly thing you can do. Other than riding a bike.
  • jdkahlerjdkahler Member Posts: 50
    Us early folks in the Highlander Hybrid discussion went through this a year ago. If it was simple $$ in the pocket, our purchasing a HH made little sense, there were a myriad of choices to replace an aging minivan and a newer Corolla. But in the complex equation of need, want, desire and resources, the HH was a good choice (basic model, no extras, 2wd). We immediately saw a net decrease in the amount of gas we were buying by about 1/3. We eliminated a vehicle that was run into the ground and going to cost at least $3-4000 to get it safe (and more costs to come - unknown). We cut out one car and the associated insurance and maintenance costs. We now have an extremely driveable and safe vehicle (Toyota added all the safety frills in the HH, and what is the value of an full complement of air bags, stability system, etc? $0 if you never use them, could be hundreds of thousands of dollars if they're called on to protect or save a life, and that's just the economic return, as the commercials say "Saving a life and protecting a loved one: priceless." Being married to a cancer survivor, I truly appreciate the meaning of priceless).

    For our overall society there were and are to us benefits. What sense is there in a cost of $2.25/gallon for gasoline (with all the complexity it takes to bring it to our tank) when compared to $3.50 or more for a gallon of milk that comes from a farm an hour drive away? I'd suggest that there are hidden costs and ways to redistribute our overall dollars (not wanting to get political here but let's be honest in a global marketplace) that influence that cost of a gallon of gas, and might be different if our country took a different view on gasoline-powered vehicles from, say Europe, where gas is much more expensive and things like public transportation are much more accessible and affordable. And yes, the early adopters tend to be those with more wealth (a relative term, we're by no means wealthy) which helps in a market economy to move a product segment that eventually results in lower costs. It's so with any technology - 20 years ago (and trust me, in those days lower-middle class would have been a good way to describe my family) we paid over $4,500 for a computer and laser printer that today would cost $800. DVD players that will no doubt be $30 again this year in holiday buying season cost $400+ when they first came out. People who wanted them or could afford them bought and the price came down. Payback? Only part of the equation. If we see return on investment as strictly the $$ in our pocket at the end of the day payback is one thing. Some also consider this in a different way - what is our investment doing for others or to improve the lot of all? Like our relatively green vehicle, we also have paid extra to purchase 100% wind-generated electricity, we donate to all range of charities with no expectation of a return on investment in our bank account, etc. Again, a complex equation.

    Now, specific to the topic, we have calculated that if we keep the HH as long as it runs (our intention in the first place, we've tended to do this with all our vehicles) with gas prices fluctuating all over the place, we will probably about break even if we consider TCO of the HH compared to a _similar_ ICE vehicle. (We could have also just kept the Corolla but it was too small for our overall family needs.) Over that lifespan when compared to the vehicle it replaced we'd save about 2,800 gallons of gas, pollute less and drive those miles in a safer vehicle. And the HH was what was available at the time when we were ready to purchase. In another 135,000 miles (or maybe more, maybe less) we'll be given the choice again. Who knows? - John
  • terry92270terry92270 Member Posts: 1,247
    From here, John, your view seems exceptional, and totally clear. ;)
  • daysailerdaysailer Member Posts: 720
    Among those who intend to buy a hybrid vehicle:
    61 % are men
    71 % are age 35 or older
    56 % are college graduates
    35 % have an annual household income under $50,000
    75 % are Caucasian
    83 % are considering a Toyota
    61 % are considering a Honda
    --Above data is a compilation of results from AutoVIBES October 2003 through December 2003

    I find it particularly curious that more than a third have annual incomes less than $50k even though the cheapest hybrid is more than $20K!!
  • gagricegagrice Member Posts: 31,450
    A lot of techno-geeks are making under $50k a year. That is who the hybrids were sold to in 2003. That was the Prius II coming out period. You could still get a HCH under $20k I believe. The other 2/3rds are probably engineers that would be in the $100k+ bracket. That would bring the average up to what Toyota claims is an $85k per year demographic.
    I don't think any of those $50k per year households will be buying the latest from Toyota. The LS600h at over $100k.
  • daysailerdaysailer Member Posts: 720
    are predominantly among the 56% who are college granduates and to therefore have a rudimentary understanding of economics. If they are also among the <$50K/annum income group, they will need economic wizzardry to be buyers of the current hybrids.
  • terry92270terry92270 Member Posts: 1,247
    90% of car buyers don't choose logically. Look at the car sales figures...you might think logically, and buy what you can afford, but MOST do not.

    Employees of mine making far less than $50K per year are driving brand new, Maxima's, Impala's, Avalon's and the like, top of the line models, leather seats, and surely costing as much as, if not more than $25,000. Go figure.
  • daysailerdaysailer Member Posts: 720
    hybrid payback, or any payback, is irrelevant!
  • gagricegagrice Member Posts: 31,450
    I think you have many people that are living at home with parents and spend all their money on a car. Then you have the group here in CA that figure they will never be able to afford a home so they spend all their cash on fancy cars. It does not make for a healthy economic climate. I don't think people are keeping cars as long as they used to either.
  • daysailerdaysailer Member Posts: 720
    We're drifting off topic, but I must say that IMO there is something tragically wrong if it is considered acceptable for an adult to be given a "free ride" by parrents while spending with wild abandon on cars (or anything else).
  • kdhspyderkdhspyder Member Posts: 7,160
    You have recently arrived to the discussions so here is the very quick summary of what were common misconceptions about the Prius.

    1) It is not comparable to the Corolla/Civic/Accent because it's bigger inside and has far more features than any of these others. Actually it is exactly the same size as the Jetta, both of which are in between the compact and midsized vehicles.

    2) There is no non-hybrid counterpart to the Prius. To compare it you have to look at a lesser vehicle or a greater vehicle.

    3) For basic transportation the Prius is not the right choice unless you want to drive the least polluting vehicle in mass production. A pre-owned vehicle is better for basic transportation.

    4) Batteries: There was a huge thread on this subject all of last year. There is no need to replace them at any specified interval. They are expected to last the life of the vehicle ( new technology ). Therefore there is no cost to the owner.

    5) The NiMH batteries are not in any way similar to the well-known lead-acid batteries in environmental concerns. In fact they have the footprint of a washing machine. The materials in them are non-toxic. But for good PR and to ensure proper disposal/recycling Toyota will pay a $200 bounty for every returned battery pack.

    Those are the reasons why you are wrong
  • daysailerdaysailer Member Posts: 720
    that items 1) & 2) are misconceptions.
  • terry92270terry92270 Member Posts: 1,247
    Sorry. :(

    I am talking about twenty/30-somethings, some married with kids, most singles.

    One, who is making $42,000, married, one kid, just bought a new Z. Was complaining about the damn payments, lol. :P

    Many of them lease, and just turn it back in 36 months for another!
  • terry92270terry92270 Member Posts: 1,247
    For matters of comparison, cars of nearly equal size and weight have always been compared. No matter the "features".
  • gagricegagrice Member Posts: 31,450
    There is no non-hybrid counterpart to the Prius.

    That may or may not have been the smartest move by Toyota. The way the TCH is selling I would say it was not a great move. The Camry has an audience of previous owners that seem pretty loyal. Selling them a hybrid version does not seem all that difficult. If Toyota builds up to the demand of the TCH, I would say it could surpass the Prius in one year. The Prius appeals to a very narrow audience. From reports there are many Prii sitting on lots since the incentive was cut in half. Sales at or near invoice are not uncommon. I think it is safe to say it has nearly run its course. Without the big tax credit and HOV stickers not many buyers are interested. The dealer I talked to about the new Tundra said his TCHs are all presold. He did have a Prius if I was interested.
  • kdhspyderkdhspyder Member Posts: 7,160
    You are very correct about the Prius being directed to a narrow market segment. It is not a mainstream vehicle by any means and as it enters its 4th year it's just like most vehicles being somewhat discounted. One of the reasons is that Toyota has doubled production for the next year according to reports. But to Toyota the more they ship ( without incentives ) the better it is. If the dealers want/need to discount them, well that's a local issue but to Toyota it's still a 'full sticker deal'.
    The goal last year was 100,000 ... 107,000 sold
    The goal this year is 100,000 ... on track I believe
    The goal next year is 115,000?... TBD

    But one thing is certain there are a lot of current owners chomping at the bit to see what the next iteration will be in Oct 2008.

    The TCH should match the Prius numbers next year at about 8-10,000 units a month ( KY + Japan ). If the demand pushed it to 200,000 units, why not? They are looking to add 200,000 units of capacity at the Subaru plant in Indiana. This could be all standard CE/LE models with all the hybrids staying in KY.
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