Depreciation Rates On Hybrids vs. Non-Hybrids

Depreciation Rates On Hybrids vs. Non-Hybrids

The purchasing decision at the time of buying a car usually depends on the factor of resale value after considering the depreciation. It is a major determinant of a car’s valuation during the trade in of the vehicle. In recent years, the debate on the depreciation of hybrid cars is getting heated with the growing demand for hybrid vehicles. These gas-saving cars are attracting buyers with low fuel costs and better resale value. The fact has been proven in a study by Autolist that showed the depreciation costs to be lower on hybrid models of some leading brands as compared to their gas-powered counterparts.

What Does This Study Entail?

This was a comprehensive study that involved more than 95 million cars. Autolist gathered the data for model years from 2013 to 2017. Mainly, the cars that had run for over 100,000 miles were included in this study. The rates of depreciation for their hybrid and non-hybrid versions were found to be widely varied. This gap was wide during the model year 2013. But, things changed gradually and by the end of 2017, the gap had surprisingly narrowed. It was found in the study that depreciation on the non-hybrid versions is 53.4 percent of its total value. This is more than hybrid models that have a depreciation of 50.9 percent.

This study was conducted with a focus on specific brands. In fact, it was found that hybrid models of these brands were offering better resale value as compared to the gas-based versions of the same car. The gap between depreciation values was higher for SUVs and sedans. With the better gas mileage of hybrid engines, these cars can offer more premiums to their owners, especially at the time of trade-in.

What Makes Hybrids A Good Option?

Earlier, buyers refrained from buying the hybrid versions with a misconception that they offer lesser resale value. This study offered better insights to these buyers. This perspective is changing and more buyers are looking to invest in these cars. The main reasons behind this narrowing gap can be mainly attributed to the improvement of technology. Hybrid technology is evolving and making way for better driving experiences. By increasing their fuel efficiency, they also enhance the value creation for the owners.

Also, the growing resale value of hybrid vehicles has increased due to the surging popularity of these cars. Customers prefer buying vehicles that run on alternative fuels and look to invest in next-generation technologies like autonomous and electric cars since they protect the environment by consuming less gasoline. Hence, as a car owner, you can reduce your carbon emissions by investing in hybrid models from your favorite brand. Opinions are changing and hybrids are offering more value to their buyers.    

At the same time, these cars are more in demand with lesser supply. Manufacturing is still limited. This demand-supply factor also affects their valuation at the time of resale. However, things may change when more manufacturers will divert their resources in this direction.