Thursday, August 10, 2006

Should I buy a Hybrid Car?

With gas over $3 a gallon and the belief that it will rise over $4 by year end, everybody is talking about hybrid cars. Just in the past week, I have been asked to speak before the Rotary Club of Palm Beach and the Kiwanis Club of Lake Park/North Palm Beach about hybrid cars. I think that I was asked because Toyota sells 80% of the hybrid vehicles in the USA and my dealership sells more hybrids than any Toyota dealer in the USA (except California where they have special emission laws).

You should approach making the decision on whether or not to buy a hybrid car the same way you would any other specific model. Just like there are good gasoline powered cars and bad ones, the same applies to hybrid cars. Some hybrid vehicles don’t even get very good gas mileage. The level of technology used in hybrid cars varies from manufacturer to manufacturer. Toyota was the first to begin investing in hybrid technology and built their first hybrid, the Prius, in 1997. Nissan was among the last to realize that hybrids are the wave of the future, and will introduce their first hybrid, the Altima, later this year (licensing the technology from Toyota).

The hybrid question I get asked the most is “will I save enough money on gas to justify the additional cost of a hybrid?” My answer is “yes, if you buy the right hybrid from the right dealer”. One very important consideration is the Federal investment tax credit available on hybrids. The amount varies from model to model. The highest tax credit is $3,150 on the Toyota Prius. This credit lowers the price you pay for the Prius by exactly $3,150. Other hybrid models have lower tax credits. The federal government calculates the tax credit based on the fuel efficiency and the Prius is rated the highest at 60 mpg in the city. The other important consideration is what you pay for the hybrid. Most dealers are making up their hybrid vehicles over MSRP. That’s because of their high demand and low supply. The third factor on whether the premium cost of a hybrid over a gasoline car is justified is based on the resale value of the hybrid. The better, higher demand hybrid vehicles retain their value in the used car market better than their gasoline powered counterparts. This means that, when you go to trade that hybrid in on your next car, the trading difference is smaller.
Hybrid cars get better gas mileage in stop and go city driving then they do on the highway. This is because the electric motor is utilized more often in this type of driving and the hybrid battery is charged each time you step on the brakes. This is called regenerative braking and converts the heat of friction from braking to electrical energy. You also charge your battery when you simply take your foot off the accelerator because the deceleration of the electric motor (which actually drives the

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