Archives

Used hybrids holding their value - for now. (http://www.autoweek.com/apps/pbcs.dll/article?AID=/20060623/FREE/60619011/1024/LATESTNEWS)

Arlena Sawyers - Automotive News - June 21, 2006

http://www.cleanmpg.com/photos/data/501/Future_Prius.jpg
2005 Prius sells for more used then new.

May wholesale used-vehicle prices indicate that 2005 hybrids hold more of their value than their 2005 gasoline-powered twins, according to price data from Black Book, a wholesale price guide.

For example, a used 2005 Honda Accord Hybrid had a wholesale price of $24,200 in early May, which was about 79 percent of its new-car sticker price. A used 2005 gasoline-powered Accord had a wholesale price of about $20,900, which was about 76 percent of its new-car sticker.

In early May, a used 2005 Ford Escape Hybrid had a wholesale price of $20,125, which was about 73 percent of its new-car sticker price. That compares with a used 2005 gasoline-powered Escape, which had a wholesale price of $16,150 - about 67 percent of its new-car sticker price.

The Toyota Prius, which doesn't have a gasoline-powered twin, has retained its used-car value even more than the Accord or Escape. In fact, the wholesale price of a 2005 used Prius in May was more than its sticker price when it was sold new. A 2-year-old 2004 Prius in May had lost about $700 of it new-car value.

The Black Book value of the 2005 Prius in May was $22,700; the value of the 2004 Prius was $20,100. That compares with a new-car sticker price of $21,815, including shipping, for the 2005 Prius and $20,810 for the 2004.

Black Book Editor Ricky Beggs says the prices of hybrids are holding up well but notes that most of the vehicles are still fairly new.

He says one unknown that could dramatically affect used-vehicle prices in the future is the cost of replacement batteries. Hybrid vehicles operate by gasoline engine and a battery that charges and discharges when being driven.

Replacement batteries, which are not an issue at this point in the vehicles' life cycle, are expensive.

Toyota spokesman John McCandless says the company has not had any battery failures in its hybrids. The only batteries that have been replaced were those damaged when the vehicles were in accidents. The cost was covered by insurance, so the owner did not incur the direct cost.

The batteries are covered by warranties that span 10 years/100,000 miles in California and eight years/100,000 miles in other states.

He says a replacement battery would cost about $3,000 but predicts that by the time the first warranties expire, technological advances will have brought the prices down.

"The battery never fully charges and never fully depletes," he says. "That is by design."

Automotive Lease Guide, of Santa Barbara, Calif., which sets residual standards for the industry, does not release residual information on hybrids.

Hybrid vehicle depreciation is indeed a fascinating topic, and I've seen no media source getting it right yet.

The classic 2001-2003 Prius has done a bit better than other ultra-reliable compact sedans. Its resale value took a healthy bump upward last summer/fall when we had our first $3 gas, then followed fuel prices down, then followed fuel up again last spring, and has since fallen again, even though US fuel costs have remained $2.80 or above. If we may regard all that variation as 'noise', what you have left is $16,500 minus 6.5 cents per mile. Easy math.

The new model Prius' high resale value continues to surprise everybody. It *has* to fall eventually, but how could it in 5 years reach the depreciation that Consumer Reports so famously predicted last April? I don't think it can, but the email reply I got from CR gave no reason to hope that they are in any hurry to correct this (other) mistake they made in that April article.

What about those big scary batteries? Apparently this is the last refuge for those still opposed to hybrids. The replacement battery will cost $2 thousand, 3, or maybe even 7! Reports vary, you see. But based on the replacements that have already happened (see below), it seems to me that $2000 would git er done. Or, if one wished to buy it used (no warranty) from the salvage vehicle dismantlers, about $600, or certainly less than $1000. The sad fact is that Prius are getting crashed out of the fleet faster than any of their important components can fail, so the parts *are* available.

As a 2001 Prius driver, and seeing all of the doomy predictions, I have made a concerted effort to track big battery failures. So far, from the 2001 model year forwards I have found 15. The latest showed up today and I have begged details from the victim (he got a new battery free from Toyota), but that's the tally. All but one, seemingly, have talked Toyota out of a free replacement. The other one plugged in a crashmobile battery, and drove away smiling (though we have not heard from him in quite a while).

It is tentative at least, to extrapolate from these internet reports to the entire Prius fleet. This does not deter me though, and I estimate that 0.1% of the original batteries have punked out so far. It would be great if somebody with access to all Prius' proprietary data would speak up to correct that, but no voices have been heard so far.

I will absolutely admit the possibility that a lot of these batteries are about to fail. Let's say that they do. Then we are talking about 1 or 2 cents per mile added maintenance cost, heaped atop the 2 or 3 cents/mi that Prius drivers are already paying (including tires and all the rest of it). I have to say, folks, that 5 cents/mile maint is not bad, given the current fuel cost of 5 cents/mile (less, of course, for hypermilers!). Throw in a dime to purchase/finance the beast, and a nickle to insure it (I am not making these numbers up, friends!) and your worst case scenario might be a 30 cents/mile car. Maybe a 20, if your battery does not blow up, you DIY the easy maintenance, and you sell your car before it (magically) tanks in value.

Let there be no doubt that anywhere between 20 to 30 cents per mile total cost of ownership is pretty tasty, given that the national average is 56.

So what's not to like? If some unlucky victim had *everything* fail, just past warranty, and could not get Toyota to provide the repairs (NB the evidence so far has been otherwise), I can imagine 35 cents/mi. Much harder to imagine 40. I continue to expect that most of the fleet will end up somewhere in the 20s.

I wish I could understand how the media in general can find this to be an expensive car to own and operate. I have tried hard, but just can't make the numbers work out so badly.

DAS

Hi Doug:

___Not only do I completely understand and agree with what you have posted; I have lived it as well. I posted more then once at IC and GH and then again earlier today here the mind-boggling low TCO of the Insight 5-speed I had the opportunity to own for almost 1.5 years. When someone looks at the TCO’s, the hybrids not only make sense, they make other cars of similar size no matter how they are equipped abysmal failures by comparison in case after case after case. Maybe someday the press will pick up on this but …

___Because Toyota continually implies there is a shortage of hybrid components (~ 6 years after the first Prius I hit our shores), they are artificially holding resale value up by severely limiting supply. The US has fought and won World Wars in less time with mobilization so any discussion of shortages is falling on deaf ears here. Given the Prius is practically un-purchasable in many locales; it makes the driving public look elsewhere. Do you want an 07 Camry LE for $18.5K (a touch below invoice) or an 07 TCH for $26K +. An 06 Corolla LE w/ Auto for < $15K or an 06 Prius II for $24K +. I am not saying the Camry LE or the Corolla LE is similarly equipped or even comparable to their/a hybrid counterpart(s) but the fact remains that you can bargain a few thousand off MSRP for the non-hybrid Corolla or Camry but cannot touch a Prius II or TCH for anything but MSRP or MSRP +. I don’t care if it’s a Halo effect or whatever, there is this problem of supply shortage being orchestrated by Toyota and until you can bargain for a Prius II or TCH just as we can with their non-hybrid counterparts listed above, I can completely understand why much of the American public looks elsewhere. Honda has done and is doing a similar thing with HCH-II supply so do not think for a second I believe they are doing the American car buyer a favor either …

___This is too bad for everyone involved because even I have been ready to lay down a few tens of thousands of dollars down for another quality and fuel efficient hybrid but I will not pay MSRP when a similar non-hybrid counterpart can be purchased for $5 to $10K less.

___Good Luck

___Wayne

well said you two, you took all the right words that everyone wanted to hear.