Saturday, October 22, 2016

When buying a hybrid car make sense

 I've recently received an email from the Toyota dealer where I bought my Prius from. The email states that it's due for its 80,000-mile scheduled maintenance.



I replaced my Honda Civic with a Toyota Prius C in 2012 hoping to save a ton of money because I have a long commute. My eldest son who was in college also needed a car at the time and my old Civic was the perfect car for him.

A Prius C is a subcompact version of the regular Prius. It was the most fuel-efficient hybrid car available in the market when I bought it, probably still is. It has a smaller battery and is supposedly more economical than a regular Prius when driving in the city.

I have driven to the moon

My workplace is approximately 40 miles away from where I live. So each and every working day, my car's mileage goes up by about 80 miles. I've been doing this commute since we purchased our home in 2004. Things like this happen when you love where you live and equally love where you work.

To put this in perspective, the miles that I've accumulated over the past dozen of years would have been more than enough for me to reach the moon!

vs

260 work days * 80 miles / work day * 12 years =
 249,600 miles

Is switching to a Prius worth it?

I've always wondered whether buying a Prius C is worth it as opposed to a relatively gas-friendly Honda Civic. I'm fully aware that this is not really an apple-to-apple comparison because I'm comparing two different car segments (compact Civic vs subcompact Prius). But am I better off buying a non-hybrid Civic instead, considering that it costs about $2000 less than the Prius?

Let's try and find out.

Obtaining historical gasoline prices

The first step is to research gasoline prices. So I went to gasbuddy.com to get the last 4- year historical information for my area:




From the above chart, I was able to obtain the average prices in the last four years. Notice the dramatic decrease in gasoline prices in 2015 and 2016 due to weaker global demand and increased supply, mostly due to OPEC members refusing to cut production pushing the supply to the highest levels.

Average gasoline prices and miles driven

Researching fuel efficiency of cars

My next step was to visit the fueleconomy.gov website to research the fuel efficiency of all the cars that we've owned throughout the years. There you can compare side-by-side the city/ highway or combined fuel consumption of the chosen vehicles.

The set of vehicles below is a very good selection because they happen  to represent 4 distinct markets according to size (sub-compact, compact, mid-size, and SUV).




Given the data that we have so far, I'm able to summarize the hypothetical cost of driving each vehicle for a total of 80,000 miles within the past 4 years in my area. For simplicity, we'll be using the combined MPG of the vehicles.


Gasoline savings matrix

From the above, I'm able to create a gasoline savings matrix that can easily tell me how much I would have saved (or not saved) when switching from a specific type of car to another. For example, this table tells me that I would have saved a whooping $8,684 when switching from a Honda Pilot to a Prius.


The same table tells me that I've already recouped the $2000 extra that I've paid for buying the hybrid because the resulting gas savings for driving the Prius in lieu of a Civic amounts to $3,256, which is substantially more than the premium.

Note that hybrids generally cost $4000 more than the non-hybrid counterpart. I've actually downgraded to a subcompact when I replaced my Civic with a Prius C.

Conclusion

Buying a hybrid made sense for me only because of my very long commute to work. Most people don't drive 20,000 miles in one year so it takes double or triple the amount of time for them to recoup their investment. Do not buy a hybrid car for the purpose of saving money on gas unless you plan to keep the car for a very long time.



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