Compensation issues

Payback, they say, is a bitch. In the July Motor Trend, Kim Reynolds checks the papers on one of its puppies:

Every time I observe somebody calculating a hybrid’s “payback miles” — that is, its price premium (if you can figure that out) amortized by its mileage improvement — I cringe. For those who need simple answers, I guess it’s hard to resist, but the tradeoffs embodied by these cars are more complex than simpleminded division. Let me flip the conversation: How many people figure out the payback cost effectiveness of a concert-quality sound system? A bigger engine? Carbon-ceramic brakes? Nobody. But for some reason, the word “hybrid” brings the calculators out.

It’s based, I think, on the assumption that no one would buy these automotive hair shirts were it not for the deep-seated desire to avoid gas stations. But would-be buyers do the same calculations for diesel vs. gas, and nobody does the math for the Toyota Prius line, which sells about 20,000 copies a month, accounting for around half the hybrid market in the States — and which doesn’t have a nonhybrid version for comparison.

Then there are the oddballs like the Infiniti M35h and the late, lamented Honda Accord hybrid, which posted modest fuel-economy gains while being faster than their ordinary brethren. What’s the payback on zero to sixty in under six? Anyone?





2 comments

  1. Roxeanne de Luca »

    8 June 2012 · 3:32 pm

    A more prosaic explanation: hybrid owners often purchase their vehicles to save money on gas. That is useless if you end up spending more to buy a hybrid than you would spend in gasoline. Other considerations for buying a vehicle (e.g. handling, features, safety) do not lend themselves to quite so blunt a cost-benefit calculation.

    That said, many hybrid owners fail to calculate that they will probably compensate for increased mileage by driving further (a well-documented phenomenon), and thus do not actually save the money they think they will save.

  2. CGHill »

    8 June 2012 · 3:50 pm

    I have never quite understood the peculiar calculus that leads people to spend $28,000 to save $100 worth of fuel every month, especially if they have to finance most of that twenty-eight grand.

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