March 2012, Business Fleet - Feature
Which Hybrids Have the Lowest Cost of Ownership?
After five years and 15,000 miles of driving per year, are there any hybrids that actually have a lower cost of ownership than their gas-engine counterparts? One unexpected vehicle takes the prize.
Fleets are as environmentally conscious as they’ve ever been, because they have more of an opportunity to curb larger amounts of greenhouse gases and smog-forming pollutants than the single consumer. In turn, a fleet’s costs to “go green” are even greater than those of the Prius-buying family — and in business, any environmental initiative must be sustainable to the bottom line.
With this in mind, the lifecycle cost experts at Vincentric put together a cost-of-ownership analysis of hybrid models. Last November, Vincentric analyzed 27 models from 2011 and 2012 model years using data from its October 2011 database update.
The Vincentric data measures eight cost elements for more than 2,000 vehicle configurations, including depreciation, financing, fees and taxes, fuel, insurance, maintenance, opportunity cost and repairs. Each month Vincentric re-compiles its database to take into account current market conditions.
For the hybrid analysis, Vincentric assumed 15,000 annual miles driven over five years. The hybrid report uses U.S. averages, although states can be selected for a more specific analysis. Fuel prices are based on a weighted average over the previous five months.
The Changing Equation
The hybrid/internal combustion engine (ICE) cost differential is an ever-changing equation. Wild swings in fuel prices are a major factor, as are available tax credits and rebates, which expired for all hybrid models on Jan. 1, 2011. New government incentives concentrate on plug-in hybrids and electric cars.
In looking at Business Fleet Magazine’s hybrid analyses using Vincentric data over the years, starting in the 2006 model year, hybrids have not closed the pricing gap with their traditional ICE-powered counterparts. In this latest analysis of 27 hybrid models, Vincentric’s data shows the average price premium for a hybrid is $8,494. Mitigated by an average fuel cost savings of $3,505 and taking into account other costs, the average cost of ownership for hybrids is $4,643 more than the straight gas models.
Nonetheless, four hybrids have total costs of ownership that are lower than their ICE cousins (see the “Hybrid Total Cost Differentials” chart).