One Study, Two Very Different Headlines

Discussing last week’s release of a survey by JD Power and Associates on consumers’ interest in hybrid powertrains, Power’s own press release said, “Undeterred by Price Premiums, Consumers Show High Interest in Hybrid-Electric Automotive Powertrain Technology.” But industry trade weekly Automotive News titled its story, “Study: Hybrids popular with consumers until they know cost.” (We would have provided a web-link, but you have to be a subscriber to read the story.)

Power’s survey identified 20 emerging automotive technologies, and asked 19,000 consumers whether they would consider purchasing them. The questions were asked before any price information was given, and then again after the average market price for each specific item was revealed.

Before prices were provided, 72 percent of respondents said they were “definitely” or “probably” interested in a hybrid for their next vehicle. Once they learned the average price—Power used a $5,000 premium, which is debatable—the “definitely/probably” group fell to 46 percent of the respondents. Of the 20 technologies, hybrids ranked fifth most popular before pricing, and eighth afterward.

The reasons the headlines conflicted, lie in the way each party looks at the data. Power’s press release emphasizes that the 2008 data represents a considerable increase over a 2005 survey, when 58 percent were “definitely/probably” interested in hybrids before knowing the price. In other words, interest in hybrids has been rising over several years.

The study really focuses on communications, safety, and information technology features, not alternative powertrains, said Mike Marshall, Power’s director of automotive emerging technologies. He put both hybrids and clean-diesel technologies into this year’s survey, he told, to look at the trade-off effects among car buyers. “Buyers say, ‘I’d like navigation, I’d like collision mitigation, I’d like Bluetooth’,” Marshall said, “but they also say, ‘I want it to be a hybrid’ and we wanted to see what they’d trade off when they had a limited amount to spend.”

The Automotive News coverage, on the other hand, looked at the rise and fall of specific technologies when prices were revealed—but only within this year’s survey. “Interest in many technologies is driven in part by availability,” it said, citing Marshall’s suggestion that clean diesel generated little interest in part because it’s not yet available, and consumers may confuse it with older, dirtier, less reliable American diesels from the late 1970s.

Instead, Automotive News focused on price point. “When the average price of a feature is revealed to be below $500, it usually rises on the list relative to other technologies,” it said. That is far more useful information for its readers—auto industry insiders, including many auto dealers and salespeople.

There’s more to come on the topic, though. Marshall told us that the 2005 interest levels in hybrids and clean diesels were high enough to spawn their own survey the following year, which looks at why consumers consider or reject vehicles with power sources other than strictly gasoline. The latest version of that survey, Power’s 2008 Alternative Powertrain Study, is due out July 11. Stay tuned.

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  • Hal Howell

    While it is true that many mid-size cars cost less than the Prius, the price margin is not that huge. My 2007 Prius came with the Smart-key, backup camera, MP3 jack, and leather seats and I got it for $24,000. When you add similar features to other mid-size cars the cost difference is not that much. Now add the fact that I regularly get 45-47 mpg and fill up only twice a month (I don’t let the tank get below half) and you have a clear winner in the Prius. Furthermore, its a Toyota, known for quality. My auto insurance actually went down even though it was a new car, so that is also something to take into account. Last of all, I did get the final tax credit of $768 and the write off of the sales tax on my income tax which contributed to a much appreciated tax refund.
    So, in getting my 2007 Prius, I got a tax benefit, only the options I wanted, a quality built car, and relief from high gas prices for a car that only cost a few grand more than other cars. At Lithia Toyota I was also able to get a lifetime oil change deal for $485. I get to change my oil 4 times a year for as long as I own my car no matter what happens to the price of oil. Yes, it will take a while to recoup the cost but over the next 10 years I expect it will definitely pay off sooner than it might appear with the rising price of oil and oil changes ARE the only major maintenance needed on the Prius. Everything taken together, I’m VERY happy with my decision on the Prius.

  • AmericaForever

    I just bought a new 2008 Prius. The federal income-tax credit is no longer available, but it’s still a wise move financially. Anyone who doubts whether it pays to buy a Prius is just not being realistic about the gas prices that are coming soon.

    When buying a new vehicle, the question is not what gas costs now. One must speculate about the likely price of gas over the life of the vehicle, i.e. the next six years.

    North American demand for oil will presumably drop as American & Canadian drivers switch to hybrids, and then to plug-in hybrids. But demand for oil continues to rise rapidly in both China & India. Even if their oil consumption starts to grow at a slower rate, the increase in their demand will easily dwarf the reductions in North American demand.

    Bottom line? We should expect total global demand for oil will continue to grow at a healthy clip.

    The US can create more supply by drilling in Alaska and off our coasts, and we should. (Yet another reason NOT to vote for Obama. McCain will at least allow drilling offshore.)

    But with global demand rising so fast, higher domestic output will merely ameliorate the gas price increases, not lead to actual lower prices.

    I drive 12,000 miles per year. With gas prices at $6, $7, even $8 in the next few years, I will easily recoup the “additional” cost of the Prius — perhaps even the ENTIRE cost of the Prius.

    Once they start assembling the Prius in the USA, our household will replace our other vehicle with a Prius too….

  • Bryce

    You could just get an Aveo or a Yaris for half the cost fully loaded, and still enjoy a fuel sipping car that u can feel good in. That is the economical argument, and explaining economics to the masses can be difficult, but if everyone wants to buy a Prius, that sounds fine to me. That way we can all consume less oil, in one vehicle or another.

  • Fredtheviking

    Is a $5,000 premuim really that bad? Let’s a assume the average consumer drives 15,000 miles a year and will hold thier car for 5 years (assuming they buy it new). Let’s say a car that gets 20 mpg costs $20,000, but the equaliant hyrid cost (at 40 mpg cost) $25000. Assuming $4 gas, non-hybrid cost about $3,000 and the hybrid costs $1500. That’s a saving of about $1500 a year. That’s $7500 in 5 years, a clear advantage. At $5, the savings is $9750. So, why wouldn’t you get a hyrid. Gas is currently underpriced (based on the cost of oil at 140). So, gas is only going to go up. So, what is everyone waiting for. People really need to do the math.

  • Paul Rivers

    “While it is true that many mid-size cars cost less than the Prius, the price margin is not that huge.”

    Car Length, from Consumer Reports:
    Corolla (small car): 179 inches
    Camry (midsize car): 189 inches
    Prius (?): 175 inches

    The Prius is just slightly shorter than a Corolla – it’s not a midsize car.

  • Old Man Crowder

    A couple of points:

    1. Funny how people will put in a back-up camera, leather seats, heated mirrors or a sunroof without batting an eyelash at the additional price. But as soon as someone says “How about saving fuel and reducing emissions for a few extra bucks?” and people hit the brakes like Wile E. Coyote, trying not to go over the cliff.

    2. The Prius isn’t the only hybrid out there. There’s the Escape, Vue, Malibu, Highlander, Civic and I believe a pair of Lexuses (Lexi?). Price margins and technologies vary on those models as widely as their market demographic.

  • Azn Brad

    It’s not about car length, it’s about passenger volume capacity.

    (from Toyota website)
    Prius: 96.2 cu. ft.
    Camry: 101.4 cu. ft.
    Corolla: 92.0/90.7 cu. ft.

    Also note that this is comparing the new model Camry and Corolla to the older model Prius. Before the update, the Prius was even more similar in volume capacity to the Camry and less similar to the Corolla.

  • maximo

    My 2007 Prius is the cheapest car I’ve owned in the last 20yrs, strange I had no qualms about buying a loaded Passat for about 32K equipped similarly to the Prius for 24K and except for the power difference they are really indistinguishable in terms of size and handling.

  • Jerry

    OH my only 46% of Americans drivers would definitely/probably be interested in a hybrid. What is that number – 60 million people? And the auto industry is producing 3% hybrid vs 97% ICE. Do you think there is an opportunnity here.

  • stephen431

    Or you could purchase an Altima Hybrid. It’s assembled in Tennesee and has the full $2,350 tax credit.

  • Giant

    I am afraid that this is all too little too late. We really should be doing a massive transition from personal transportation to public transportation. Y’all need to buy yourselves a nice bicycle.

  • Todd C.

    Help me out here: of the comparable hybrids available, which ones are based on technology licensed from Toyota? I thought I heard that Nissan’s Altima fell into this category, possibly Ford’s Escape too. Just curious. Anybody know?

  • TruthHunter

    McCain was not speaking the truth when he said more drilling would reduce gas price. America only has 3% of world’s oil deposit, and is one of the world’s biggest oil consumer nations. This is a straight forward slam dunk that more drilling would only benefit oil companies, and do nothing to gas prices. This is McCain’s way of saying he cares more about oil company’s pocket-book than your pocket-book. Beside, California has many on-the-ground oil wells already; we are already producing oil in California where it makes sense to do so.

  • mdensch

    Todd C: To clarify the Ford/Toyota licensing issue.

    Ford engineers had done considerable work developing hybrid technology when they realized that their system had certain similarities to Toyota’s system. As a courtesy and to avoid potential litigation, they approached Toyota about entering into a licensing agreement. The two car makers struck a deal in which Toyota gave Ford license to use some of its hybrid technology, and Ford gave Toyota diesel and direct-injection engine technology.

  • Todd C

    to mdensch:

    thanks for the info.

  • Old Bald Guy

    Paul Rivers,

    If you want to park a Prius next to a Corolla or a Camry, you will notice that part of the length of the cars is engine compartment and part of the length is passenger compartment.

    Whether a car is classified as a compact or midsize car is NOT based on how long the car is but on how much room there is for people and what those people are carrying. Yes, the Prius (your numbers) is shorter than the other cars, BUT it has more people room. YES, the Prius IS a midsize car.

    Also, I don’t get this crap from some posters about “premium” price for a hybrid. My 2008 Prius price fell into the middle of the price range for other mid-sized cars … and, with 50+ MPG, I am saving a ton of money over what I was driving … a 17 MPG SUV. I drive about 500 miles a week and am saving about $300 a month on gas (at a price of about $3.90 gal).

  • Old Bald Guy


    It is NEVER too late to begin to do better. Anything we can do to help our situation and others is good. To put in a good public transportation system here in the Dallas/Ft. Worth metro would take Billions and Billions of dollars (which no one has yet been willing to pay for) and would take years and years to build.

    Bicycles are nice … but not even remotely a consideration for millions of people … including us here in Texas driving 25 miles each way in 100 degree heat. I work at the 3rd largest airport in the world and there are NO bicycle lanes in or out or even near it. That is partly why I drive a Prius with 50+ MPG.

    When someone actually comes up with a better plan that actually works … I am on board.

  • Movin to Europe

    Ya’ll screwed in the US with all those highways to take yer nowhere…eating up gas and all. Living in Europe is a blast in the highspeed trains to take you everywhere….public transit such as streetcars, the tube underground to move people and off the roads….yeahaw.

    all i need is a bike or scooter

  • Kerry

    Many people in this country, frankly, are terribly STUPID. Asking them to do math is out of the question. Most Americans, it seems, make decisions based on how young/hip/sexy/glamorous they’ll feel afterwards.

  • Bryce

    I enjoy driving on my highway and being able to go whenever I want at whatever hour I want, no matter how late or early. Being able to step out of my vehicle at my very destination and not having to wait for connector busses is a plus too. Besides, if millions of people are doing it in CHina and India, why can’t the Europeans do it……can they afford it……or maybe there just isn’t the room in those compacted little countries. Anyways, millions of people will continue to switch from bikes and scooters and busses around the world to automobiles, and as vehicles become more fuel efficient/use electricity or whatnot, arguments for public transit will die in the cradle……again.

  • Bryce

    By the way, I ride public transit around town in the bay area when I am at school most of the year just cuz the bay area isn’t accomadating to vehicles whatsoever with gas prices/insurance costs/no parking. During the summer however, I cruise around southern California in my beautiful car and enjoy every minute of. I will enjoy it even more when I get out of college and can purchase exactly the vehicle that combines fuel economy, power and style. (of which, many vehicles meeting those specs are coming out) So anyways, public transit has a purpose, and that is to service people in crowded urban environments, which is where it excels. Try putting such an extensive network up that goes to every damn city and telling people to ride that instead of their cars…..well, good luck convincing small town USA of that.

  • Bryce

    here is one of those shiny new vehicles coming off the line. : )

    its that small car by chevy this site reported on that will be coming out in a year and a half. Beautiful looking, and with fuel economy that would make Aveo/Yaris drivers salivate. : )

  • Elis

    Why is no one mentioning the battery life and replacement cost? My mechanic told me the batteries were good for 5 years and cost $3,000.00 to replace. If that’s true, then these hybrids aren’t as “green” as they are built up to be. Aren’t batteries toxic and hard to recycle??

  • Bryce

    well, 5 years may be a little short, but when the car itself is scrapped, the battery indeed will be a problem. I wonder if they will be removed from the vehicles before they are scrapped for perhaps their own bit of recycling. I guess all that stuff will start coming to in the next 5 years as the earlier priuses start to get scrapped after accidents and what not.

  • Elis

    Well, what I am not too sure about is whether the battery is no good and must be replaced after 5 or so years….which is the case according to my (biased against buying new cars to save money) mechanic.

    I’ve never purchased a new vehicle, and keep the used ones I do buy, for many years. Wonder what the life expectancy is now a days for a new car.

  • Bryce

    Life expectancy for a car is pretty damn long if u take care of it. According to good old governmental studies, 7.8 years i think is the average time a car is owned before the next is purchased. Not bad fot he average. I personally (along with the rest of my family) am one that takes care of my cars and holds on to them for a long time. I expect the battery packs to last beyond the 5 year mark because the packs in those old Honda Insights and Toyota priuses from about 8 or 9 years ago are still going strong. The key is, that the packs are kept in a certain charge zone. Soo long as the battery is nto fully charged or fully depleted, battery life will be maximized. The car computer does this. Sometimes when u turn on a prius, the engine will turn on randomly so as to maintain battery charge within that sweet spot. I take it u are in the market for one of these vehicles and are wary of what u are going to have to deal with??? If so, don’t worry, I am not some hybrid fanatic that wants to save the world one hybrid at a time or anything. Just a guy that finds them interesting. I don’t even own one, though I ahve driven them. They are interesting, if not a little quirky. (the priuses anyways) They will get u from point A to point B no problem. About how long do u keep your cars for. My mom has had her Suburban for about 9.5 years now and it runs beautifully. My 98 Chrysler Concorde runs great as well. (though that car has only been in my hands for the past 3 years, pre-owned before me, first car and what not. I think it was a nice little rental that ran between LA and Las vegas. Real nice with leather seats and 3.2L V6) So are u looking at 10+ years like me??? What is your potential car ownage range that has u worried about battery problems???

  • Elis

    Thanks for your insight Bruce. It’s good to know that some of the older batteries are still functional…I trust my mechanic but I guess he is a bit biased. Yes, like you, I am looking for 10+ years in car ownership. Right now I am driving a ’94 Astro….that makes it 14 years old. Of course it’s become a “money sponge.” My first ever vehicle was a ’54 Chevy…and I know it would still be running if I’d kept it! I am not the typical consumer, I weigh just about every decision against poor steward ship of our recourses. Not that I live a saintly life…I’m just aware of my “foot print.”

    So many resources go in to making a new car, and used cars have always gotten my around. The hybrids appeal to me because of the gas savings. However, I have been trying to figure out exactly what the trade off is in terms of: 1. the pollution caused by producing electricity (I believe here in San Antonio it’s coal), 2. pollution caused by manufacture process, 3. battery life and disposal, 4. cost of a new car. In other words, one may believe that by driving a Hybrid they are being “green”, when in reality they are not. But I haven’t seen used Hybrids for sale so that’s a good sign!

  • Elis
  • Bryce

    Yea, honestly, I think people go through cars too fast. As soon as the payments are done, they toss it for a new one. I would much rather get a quality car and hold on to it until it dies or gets too expensive to maintain.

    I will try to answer a few of your questions now. : )

    Electricity production varies from region. I knonw here in CAlifornia that there is pretty much no Coal used. Mostly natural gas and renewables. Maybe some nuclear I think. As far as Texas (I am assuming TExas cuz u said San antonio)goes, a good chunk probably is from coal, but I suppose you can look at it this way: your car is going to rpoduce the polution anyways, so using electricity domestically produced may satisfy some home grown energy urge. That only pertains to plug in hybrids/electric cars though. If it is a standard retail Pius, for example, there is no plugging in and the car produces the electricity itself.

    As far as the manufacturing process, I am prettys ure that the manufacturing process for a hybrid produces the same ammount of pollutants as a conventional car. In fact, nowadays, car companies are creating much greener facilities. I know GM just put the largest roof based solar array in the world onto their plant in SPain. They also have plans to expand onto more of their plants. I figure other automakers will follow suit.

    Battery life, like I said, can be nearly infinite cuz the software in the car keeps it at the optimum charge for long battery life. DIsposal is probably the same as regular car batteries. Landfills I think. Nowadays they are nickel metal hydride or lithium ion batteries, which I would guess are no where as poisonous as the old lead acid batteries.

    The cost may be the only thing that may scare u. Hybrids do tend to be a little more pricey than their conventional counterparts. Buying used is pretty much out fo the question also, cuz I have yet to see a hybrid driver willing to part with their vehicle in light of high gas prices. In the coming years however they may become more available used. What size of car are u looking for exactly??? A compact car, a sedan, and SUV? I might be able to make some recommendations. : )

  • steved28

    Just a couple corrections/answers…

    Hybrid batteries are considered by the fed to be part of the emission controls. And thus are warrantied 8 yrs or 100,000 miles. In California and states that adopt California Emission Control Coverage, warranty is 10 years or 150,000 miles. So hybrid manufacturers who sell in California must meet these numbers, but they don’t make specific changes for California cars, so we all benefit.

    Your mechanic is scared, because hybrids require far less maintenance than a traditional ICE car. Part of the reasons include, electric power steering, electric A/C compressor, less run time on the engine, simplified transmission, no alternator, far less use of brake pads.

  • Bryce

    That is a possibility. I know in these tougher economic times, it seems that people are trying to part u with your money a little harder. We just had a plumber come out to something that he said would cost 200 at first. Then it became 400, then 500 then 700. We told him to leave. Beware of scams more than before and beware of supposedly nice people that are just hard up for cash.

  • manny

    People will buy what they think is best for them..its their business if they drive a hybrid or SUV or a BMW! Who cares?
    Bottom line is:
    If you drive a lot…GET A PRIUS HYBRID….If you drive a little..GET ANY CAR that gets the “supposed” 30mpg they are advertising now. I drive 50-70miles per day and spend ave $35 a week in gas @ ave $4.25/gal. Smart? Of course. I get ave 55 mpg. Some of my co-workers drive the same distance, and drive SUV’s, and other ICE’s. Thats their business!
    Hybrids have little to NO maintainance at all besides oil change and wiper blades..if driven normally.
    There have been few reports (aprox .003%) of any 2nd or 3rd generation Prius battery going bad over past 8-9 years since their debut in Japan in 1997, and we still don’t know how long they will last.
    Prius batteries can be exchanged to a plug in Lithium ion battery at a high cost. That dollar amount will hopefully come down like all new technology that becomes readily available to the average consumer.

  • Bryce

    after market is pricey. U might as well just wait for the Volt. : ) That way u can get the proposed 7k tax rebate. Doesn’t that sound nice.

  • janice

    So do we really save money on hybrids? The blog is confusing, So it cost more when you buy it but in the long run it can save you more? Autopartswarehouse has blogs about hybrids too, that’s how they say it.

  • Bryce

    wow, your that guy advertising on this site again. So are u just going to go through every post and do that then???