Car Buying Tips

Low fuel costs eroding hybrid efficiency benefit: Vincentric

Cheaper gasoline has reduced the cost-of-ownership benefit for hybrid vehicles versus comparable gasoline-powered vehicles, but there are still some overall money-saving hybrids out there, according to Vincentric LLC’s latest Canadian Hybrid Analysis study.

Michigan-based Vincentric’s 2016 data shows that 17 percent of hybrid vehicles available in Canada offer a lower cost of ownership than comparable gasoline models. That percentage is down from 24 percent in the data analytics company’s 2015 Canadian hybrid study.

Vincentric President David Wurster said hybrids are losing their edge in the cost-effectiveness contest because of lower fuel prices, which make it more difficult to recover the price premiums many hybrid models command over comparable gasoline-powered models.

The seven hybrids deemed more cost-effective this year – based on a combination of purchase price, rate of depreciation and fuel savings over a five-year period that assumes the car is being driven 15,000 annually – were the Ford Fusion Hybrid Titanium, Hyundai Sonata Hybrid in Limited and Ultimate trims, Lexus’ CT 200h, the Lincoln MKZ Hybrid, Toyota Prius V and Toyota RAV4 Hybrid Limited.

In a number of cases, only particular trim levels of a given hybrid model were deemed most cost-effective, due to a combination of the difference in purchase price and the car’s fuel consumption estimates.

The Hyundai Sonata Hybrid Ultimate was the only gas-electric model to combine a lower cost of ownership with a lower rate of depreciation and score among the vehicles with the top 10 estimated fuel cost savings. Its closest gas-powered competitor was the Sonata 2.0T Ultimate.

From our point of view, if there’s a flaw in Vincentric’s methodology, it’s in how the company chooses conventionally fuelled cars to compare with models only offered as hybrids.

Wurster says Vincentric has no formula for choosing comparable models, aside from staying within the manufacturer’s own lineup and selecting a vehicle similar in terms of size and power.

So cars like the Toyota Prius present a challenge in that there is no gasoline-fuelled Toyota model to compare it to directly. Vincentric chose the Corolla, whose MSRP comes in around $8,400 less than that of a Prius with similar features, so according to the data, the Prius costs anywhere from $4,300 to nearly $4,600 more to operate over a five-year period than a Corolla. We have to wonder how many people actually cross-shop the Corolla against the larger and far more technologically sophisticated Prius hatchback.

There’s a similar, but smaller, discrepancy between the Ford C-Max, a compact hybrid wagon, and the Ford Focus sedan Vincentric compares it to.

It’s more straightforward with cars like the Sonata, Ford’s Fusion and the Toyota Camry and RAV4, for example, all of which are offered with a choice of hybrid and gas-only drivetrains.

Hybrids aren’t the only vehicles touted as budget-boosting fuel savers. In some driving situations, diesel engines offer just as much potential for cutting consumption, but like hybrids, they come at a premium price compared to gasoline-powered models. We wanted to know if Wurster felt the Volkswagen diesel emissions scandal had given hybrids an advantage in the marketplace, either in terms of residual values or sales volumes.

“That’s a relevant question for us,” said Wurster, who explained that Vincentric decided to put off this year’s diesel analysis because the VW scandal forced such a wide variety of diesel models, including some from Porsche and Audi, off the market.

“Residual values take time to start moving, because you're looking into the future, and this diesel thing may be a temporary blip,” said Wurster. “Five years down the road, people may have forgotten about it and it’s probably not going to affect the (vehicles’) value long-term.”

Wurster feels that in the long run, the current challenge is VW’s to overcome, and not the diesel market generally.

We also wanted Wurster’s take on the hybrid’s continued relevance as fully electric vehicles become more sophisticated and make inroads into the marketplace.

“I look at the Chevy Bolt as a bit of a game-changer in that regard,” said Wurster. “It seems like it’s going to be the one affordable electric for at least another year, and eliminate the range anxiety that people feel. They're breaking some ground there, and the other manufacturers have to step up their games to offer some product variety. It can’t be a one-vehicle market.”

Wurster said Vincentric is interested in EVs, but that they wouldn’t be as important in the marketplace as it was a few years ago. “But since we know the marketplace is changing somewhat, they’re going to continue to be more and more important. There’s a transition period, too. These cars aren’t popping out of nowhere. There’s not going to be a heck of a lot in the next two years, but maybe in five to seven years, you’ll see a lot more choices.”

No matter the alternative fuel source a driver chooses, Wurster said it’s important to remember that different people have different needs.

“The more you drive, the more valuable the savings are associated with hybrids,” Wurster said. “It’s an operating cost issue, as fuel is the largest (one). Even if a vehicle doesn't cost less to own and operate, that doesn't mean it's not the right car for you, and a lot of people think that way. There are a lot of things that go into this, but we hope to show a snapshot to show where some of these vehicles really shine.”