Hybrid Car

Economic Impact and Foreign Hybrid Car Use

Hybrid cars make sense: they use less petrol and produce less emissions, saving precious fossil fuels and reducing their impact on the environment.

But if Australians plan to buy them to save money, they could be disappointed.

The models currently on sale on the local market, and those set to be sold here in the next few years, all sell at a premium price.

And, even with petrol prices skyrocketing, when compared with small, conventionally powered vehicles, they still lag behind in total running costs.

The cheapest hybrid available in Australia sells for more than $35,000.

Compare that with a smaller, four-cylinder car, which retails for well under $20,000, the savings in petrol costs need to be significant for the sums to add up.

At present they’re not, with a hybrid likely to return a fuel economy figure of between four and five litres per 100 kilometres compared with about six or seven litres for its smaller rival.

At current petrol prices that would mean a saving in petrol costs of about $6,500 over the 200,000km life of an average car.

Even comparing a hybrid to a similarly-sized car, the time taken to recoup the extra purchase price remains about 10 years, according to Royal Automobile Association (RAA) technical services manager Mark Borlace.

“When you’ve got a (price) difference of about $8,000 you really have to pay that off with the fuel savings,” Mr Borlace said.

“Currently, with the fuel the way it is, the payback is probably around a decade.

“So it’s not the sort of thing you do for purely financial reasons.”

Mr Borlace said hybrid models had a reputation of being a statement vehicle.

“It’s people saying: ‘I’m affluent enough to buy one and I care’,” he said.

But there are alternatives.

The stable and cheaper price of LPG makes conversion an increasingly sensible option for local motorists and factoring in the $2,000 federal government grant, LPG Australia said the pay-back period could be a little as seven months.

Rising petrol prices are even making conversions for smaller, four-cylinder vehicles, a viable proposition.

Korean car maker Hyundai is also considering bringing a hybrid model to Australia that uses LPG as its base fuel, reportedly reducing running costs to as little as $10 a week.

And US motor giant General Motors recently announced the 2010 start of production for its Volt plug-in electric car and hasn’t ruled out selling the car in Australia.

Diesels also have a growing place in the local auto scene after being warmly embraced by European motorists for many years.

While the price of diesel fuel is currently higher than petrol, improved fuel economy and just where and how they’re driven can easily turn the tide in favour of the oil burners.

In March this year, Britain’s Sunday Times newspaper conducted a fuel-efficiency trial, driving a diesel-powered BMW and a Toyota Prius hybrid from London to Geneva in Switzerland.

Surprisingly, the diesel completed the near 900 kilometres on just 49 litres of fuel, while the hybrid took 51.

To be fair, the hybrid was not suited to the many kilometres of high-speed motorway cruising the trip included, with its technology best suited to stop-start driving in the city which allows the car to run more often on electric power.

But test driver Jason Dawe said he had never driven so slowly or so carefully for so long in his life.

When they were first introduced some years ago, hybrids were generally considered just a stop-gap measure, a way to cut fuel consumption and reduce running costs while the world waited for the introduction of more advanced technology including plug-in electric cars and those powered by fuel cells.

The fact that they’re now viewed as a longer-term solution to high petrol prices and dwindling world oil supplies, is largely due to their relentless promotion by some sectors of the car industry.

The move by Toyota to build a hybrid Camry in Melbourne, possibly to be followed by Holden building a hybrid Commodore in Adelaide, will provide a much needed boost to the local auto manufacturing industry which recently weathered the loss of Mitsubishi as a local car builder.

But the jury is probably still out on whether or not a limited production of hybrids will provide a real boost to Australian consumers struggling with the rising cost of living.

Supporters say Toyota’s decision is at least a start towards a greener future for the auto sector.

However, the unknown in the equation is just how much petrol prices will climb.

As they continue to push higher, the purchase of a hybrid will make increasingly more sense.

And as the cars become more widely available, the purchase price is likely to come down, at least relative to other models.

To win over an increasing number of buyers, the federal government might have to consider a range of other incentives including direct subsidies to hybrid owners, rebates on registration fees, priority access to lanes reserved for alternative-fuelled vehicles and even discounted petrol.

Certainly, that’s what other countries have looked at, with the US allowing hybrids into high-occupancy vehicle lanes designed for vehicles carrying passengers, even when there is nobody else in the car.

In Britain, a hybrid incurs less road tax and can enter London’s congestion zone without paying the near $20-a-day charge.

It’s measures like these, not just financial assistance to car producers, that the federal government might need to embrace if Australia is to become a hybrid-driving nation.

Of course, many consumers seek hybrids for environmental reasons that, to them, outweigh the sticker price. But strictly from a cost standpoint, the hybrid isn’t always the best
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bet. Some models still have such big price premiums or modest mileage improvements that buyers ought to think carefully before buying. These include the hybrid versions of the Toyota Highlander, Chevrolet Malibu, Saturn Aura and the ultra-luxury Lexus LS600H.

“There are really only a handful of hybrids that may be good financial propositions for most consumers right now, and the Prius is one of them,” said Jesse Toprak, executive director of industry analysis for Edmunds.com.

Edmunds’ calculations focused on the cars’ sticker prices – comparing the amount paid for a hybrid model over a gas-engine version of the same model, if available. Then analysts factored in rebate offers on the vehicles, the gas mileage in both city and highway driving and, of course, the price of fuel, which averaged $4.02 a gallon at the time of the study. Also included in the calculations were federal tax credits, which can reach up to $3,000. The calculations do not account for differences in costs for repairs and replacement parts, for example; nor do they factor in varying costs to insure vehicles.

Even so, the hybrid option is a better proposition with regard to payback than when gas cost $2 and $3 a gallon, said George Pipas, sales analyst for Ford Motor.

That should help drive sales in the same way it has helped drive sales of small cars. “It was always the case that as economics made it more favorable, that demand would grow and go beyond those that were just curious or early adopters,” Pipas said.

Consumers, Pipas said, need to evaluate their needs. They may find that a fuel-efficient, four-cylinder car may be a better route. “With a higher price of gasoline, it becomes a better proposition for the consumer depending on the kind of driving they do,” he said.

Hybrid Cars