Should you buy a used hybrid?

By Liz Pulliam Weston

Buying a gently used car is generally a smart financial move. Because vehicles lose so much value in their first year of ownership, you can save a bundle by letting someone else take that depreciation hit and buying the car after one to four years of use.

The math is a bit different for used hybrids, however. They can still be a good deal for the right buyers, but you need to tread carefully and consider issues that are unique to these cars.

Hybrids have been around long enough, and there are enough used versions in the marketplace, that we're finally getting a handle on how they hold their value over time, said Kelley Blue Book market analyst Jack Nerad.

The answer is: not as well as their traditional counterparts.

• Tell us: How is your hybrid holding up?

Hybrids typically lose value faster than comparable conventional models, and their value really starts to plunge as they approach the end of their "hybrid components" warranty. (Warranties on the battery and other hybrid features are typically eight years and 80,000 miles.)

After two years, for example, a Honda Civic hybrid is worth 60% of its manufacturer's suggested retail price, Nerad said. That compares with 66% for a gas-engine Civic. After five years, the hybrid has retained just 43% of its original value, compared with 50% or so for the regular Civic.

The Toyota Prius, another hybrid, retains 58% of its value after two years, Nerad said, and 41% after five.

Fast depreciation is a double-edged sword. You get the used car cheaper, compared against its original sale price, but you can't get as much when you eventually sell. That can mean a higher overall cost of ownership, which offsets any fuel savings.

The depreciation issue is related to one primary concern, car experts say: the vehicles' still-new technology.

Uncertainty continues

The real issue, said MSN Autos Senior Editor Perry Stern, "is that the first hybrids are approaching the end of their battery warranties. Batteries can't last forever, and if a hybrid isn't worth the cost of its replacement batteries, you can end up with a nonfunctioning car worth nothing at all."

By all accounts, hybrid batteries are holding up extremely well, the car experts say. Although replacing them is expected to be pretty costly -- estimates range from $2,000 to $5,000 -- failures seem to be rare, the experts agree.

"With all the people I talk to, you'd think I would have heard about somebody who's had a battery die," said Joe Wiesenfelder, senior editor for Cars.com. "That hasn't happened."

There have been anecdotal reports of other expensive problems. I related one in "High-tech cars mean high-priced repairs"; others were covered in a ConsumerAffairs.com report on the Prius.

Manufacturers generally seem to be stepping in to offset at least some of the costs, and hybrids overall enjoy a reputation for above-average reliability. But any maintenance or repair that involves the hybrid components is likely to be pricey because few mechanics outside dealerships are qualified to work on the cars.

That affects insurance premiums as well. Because repairs tend to be more costly, so does the cost of insuring the cars against damage.

And hybrids still can't shake persistent concerns about their technology, particularly as they approach the end of their warranties."There's so much uncertainty still," Wiesenfeldersaid, "about longevity and battery life."

You might not save money

Hybrids sell for a premium over other cars. Combined with their faster depreciation, higher maintenance costs and higher insurance premiums, that tends to offset most or all of their fuel savings over a five-year ownership period.

When purchased new, the tax credits that are available for many hybrids can help change the math.

Continued: Do the math before you buy

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