Even with this week’s slight dip in oil prices, next week is likely to bring the dreaded return of $4 gas as the official national average at the pumps. (Last week, it hit $3.96.) The knee-jerk reaction from many Americans will be to dump the family gas-guzzler as swiftly as possible, and rush out to purchase a smaller fuel-efficient car or hybrid.
But, according to Jeff Bartlett, deputy online automotive editor at Consumer Reports, this might be exactly the worst time to buy a hybrid or other new high-mpg model. That’s because every other person saddled with a large SUV is adopting the same dump-and-run approach. Therefore, the value of those gas hogs is dropping like a stone at the exact time that incentives are disappearing for hybrids and small cars in high demand.
“The best advice for a fair portion of people is to think through the long-term picture and hold to a gas-guzzler for next few months,” said Bartlett, in an exclusive interview with HybridCars.com.
Bartlett is not saying that hybrids aren’t worth the upfront investment. Just the opposite. If you buy one of the truly efficient hybrids—like a Toyota Prius, Ford Escape Hybrid or Honda Insight, then “buying a hybrid can quickly pay itself off.” But those economic benefits are undermined when buying your hybrid at the exact moment when hybrids are in greatest demand, and when trading in your less-efficient vehicle is the least desirable.”
According to Bartlett, the value of a $35,000 Ford Explorer has depreciated by $20,000 in the last five years—an amount lost that comes close to the purchase of a base-level Toyota Prius.
Timing Is Everything
In essence, Bartlett is asking car buyers to reexamine two American propensities: the tendency to buy a car that exceeds your required needs, and a fickleness that leads to flitting from one vehicle to another based on short-term changes rather than long-term trends.
Bartlett’s advice was shaped by Consumer Reports’ April survey of more than 1,000 adult car owners in the United States. A whopping 92 percent of respondents said they wanted a jump in fuel economy in their next vehicle. The reported average fuel economy of cars owned by survey respondents was 23 mpg—and they said they wanted an improvement to 29 mpg.
Most respondents were motivated to save money, and therefore, downsizing is “the realistic answer for most people,” according to Bartlett. But “buying a new car right now won’t save money.”
Then what? Admitting the mistake of previously overbuying is the first step. Then, pause to ask what you think the next five to 10 years will bring—not only for the economy and gas prices, but your personal financial and transportation needs. Start the process now of comparing hybrids and other models for total cost of ownership over the full period of ownership, as long as eight years. “We encourage people to make a careful decision they can live with,” Bartlett said.
And be prepared to stick with that decision for several years, no matter where gas prices go.