Do Rising Gas Prices Have You Thinking Hybrid? Think Again
CarGurus Study Shows Gas Prices Need to Exceed $7 a Gallon for Hybrids to be Cost Justified – Almost 2X the Historic High of $4 a Gallon
CAMBRIDGE, Mass., March 11, 2011 -- A recent study by CarGurus (http://www.cargurus.com/) shows that gas prices would have to top $7 per gallon for the gas savings of most hybrids to overcome the substantial price premium paid for such vehicles at the time of purchase. As historical perspective, the last time the U.S. national average price of regular gasoline exceeded $4 per gallon was June 2008 ($4.05), which was the highest price on record since 1990.
The CarGurus study, which analyzed 43 hybrid cars that have similar non-hybrid, gas-powered models, showed that on average the hybrid models cost 17% more to own and operate than their non-hybrid counterparts, even with gas prices factored in at $4 per gallon. For buyers considering buying a hybrid in light of rising gas prices, the data offers additional perspective on overall costs associated with such vehicles.
"There are some good reasons to buy a hybrid, but saving money is not one of them," said Langley Steinert, CEO of CarGurus. "Consumers should know that the premiums they will pay to purchase most hybrids far exceed any costs saved at the pump, even as gas prices climb. Overall, hybrids do not offer the value that many consumers expect."
The so-called “hybrid premium” can be substantial. In the 43 models studied, the average MSRP of hybrids was almost $6,400 more than that of their gas-powered counterparts. In the large majority of cases, the gas savings from hybrids did not overcome the substantial price premium paid at the time of purchase. For example, the break-even point for the Cadillac Escalade Hybrid was found to be on average $15 per gallon, and for the Nissan Altima, $9.50 per gallon.
Of the cars analyzed, there were two clear winners: The Ford Escape Hybrid and the Toyota Camry Hybrid. The Toyota Camry Hybrid showed a break-even point of $4.00 per gallon and sells on average for just $3300 more than its gas powered counterpart. Likewise, the Ford Escape Hybrid showed a break-even point of $2.50 per gallon – significantly less than the current national gas price average of $3.51. The Ford Escape Hybrid sells for on average just $3,500 more than its gas-powered counterpart and has substantially higher gas-mileage statistics. Both of these factors – a low premium and improved gas-mileage versus the non-hybrid counterpart – are things consumers should look for if they are considering a hybrid purchase.
Consumers looking at the Ford Escape Hybrid or other fuel efficient cars can search for the best car deals in their local area using CarGurus' DealFinder. CarGurus' DealFinder is a free online car shopping service that helps consumers find the best deals on new and used cars. Indexing over 2 million listings a day, CarGurus' DealFinder analyzes each car listing and compares the listed price against historic pricing models to gauge whether the listing is a good deal or bad deal.
CarGurus Hybrid Value Retention Analysis – Methodology
CarGurus looked at the total cost of ownership for 43 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. For this analysis, gas prices were calculated at $4 per gallon. Note, the Toyota Prius was not included in this analysis as it does not have a non-hybrid counterpart.
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.
 Source: U.S. Energy Department – U.S. Retail Gasoline Historic Prices 1990-2011.