Is a hybrid car really good for your wallet?

Roland Jones Business news editor • Profile • E-mail

Billed as the hottest answer to surging gasoline prices, the hybrid car has emerged as a panacea amid America’s automotive-fueled economic anguish. But with the price of gasoline rising to record levels, is a hybrid is really good news for your wallet?

Hybrids like the Toyota Prius or the Honda Insight are certainly among the most fuel-efficient cars now on American roads, clocking up some 40 or 50 miles to the gallon in some tests. And owning a hybrid vehicle also means you’re doing your part for the environment by reducing auto emissions. The vehicles, which run on a bifurcated system using an electric motor and a gasoline engine, significantly reduce smog-forming pollutants and carbon dioxide emissions.

But if you’re concerned about rising gas prices, it doesn’t necessarily follow that a hybrid car is your best bet, according Tom Appel, editor of "Consumer Guide: Automotive," a guide for car buyers. And with the price of retail gasoline surging to a record national average of $2.55 a gallon in the latest week, most consumers are likely thinking more of their financial health than the environment, he notes.

“People are buying hybrids because they like to think they are doing something for the environment, and generally if you burn less fuel you pollute less, but if your main motivation is to save money, the best way to go isn’t necessarily a hybrid,” Appel said.

Consumers who buy a hybrid car may buy less gas and have lower maintenance costs, but insurance costs can offset those savings, and hybrids generally cost more than conventional gasoline cars.

According to a recent study by automotive research Web site Edmunds.com that compared the break-even point of owning and driving a number of popular hybrids against conventional gasoline models, hybrid owners would have to drive thousands of extra miles or pay steep prices for gasoline to make up for the additional cost of a hybrid in five years or less.

One exception is the Toyota Prius. Compared with the similarly-sized Toyota Camry LE, over the first five years of ownership the Camry is expected to cost its owner just $81 more than a Prius.

Edmunds.com estimated that the price of gasoline would have to cost at least $5.60 a gallon for hybrid drivers to break even if they drove 15,000 miles a year over the five years. But even though the cost of gasoline is now at about $2.50, car shoppers shouldn’t be too complacent according to Phil Reed, consumer advice editor at Edmunds.com.

“My feeling is anyone shopping for a car now should make the question of fuel economy a big issue because the availability of oil in the future is uncertain,” Reed said. “Don’t buy a car thinking it's acceptable today; one day it could be your hedge against high fuel costs.”

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