Will a hybrid car save me money in the long run?

When you think hybrid, you think fuel lefficiency and green motoring. But, hybrid vehicles often cost more from the outset to purchase. Is the extra cost going to save you money in the long run? That's the question CarAdvice reader Esther wanted an answer to.
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Q: Which car would save me more money in the long run? A Toyota Yaris ZR or a Toyota Prius C i-Tech. Also is there much difference between the two cars in terms of servicing?


A: Hi Esther, both vehicles are similar in size and the Toyota Yaris ZR costs $21,490, while the Toyota Prius C i-Tech is $25,990 (both non-inclusive of on-road costs). That's a difference of $4500.

To calculate the running costs, I have assumed that you will travel 15,000km a year and pay an average of $1.50 per litre for fuel. Additionally, I assumed that both cars are serviced regularly under Toyota's capped price servicing program and assume that you will hold on to the car for five years.

To start with, the Yaris ZR uses 6.3L/100km on average. If you travel 15,000km per year, you will need 945 litres of fuel. This volume, multiplied by $1.50/litre comes out to $1417.50 in fuel for the year and $7087.50 over five years.

2014 Toyota Yaris HB ZR

Over a five year period, servicing costs $140 every six months, which comes out to $1400 over a five year period. These two costs combined equal $8487.85 for running costs over five years.

The Prius C i-Tech on the other hand, following the same assumptions as the Yaris ZR comes out to $5787.50 over the same period. This is thanks to its lower fuel consumption — 3.9L/100km. The servicing costs are the same as the Yaris, $1400 over the five year period.

Given the the Prius C i-Tech is $4500 more up front and the running cost difference over the five year period is just $2700 (in favour of the Prius C i-Tech), that means you will be $1800 out of pocket if you purchase the Prius C i-Tech over a five year period.

The point at which the Prius C i-Tech becomes a more cost effective proposition than the Yaris is after the 8 year mark. You can see the relationship between the costs in the graph below.


So, if you plan on holding on to the car for a shorter period of time, such as five years, it's cheaper to purchase the Yaris. But, if you are content with retaining the vehicle for over 8 years, the Prius i-Tech becomes a cheaper operating option.

Keep in mind that the more you travel each year, the quicker that breakeven period hits. Likewise, if you travel less each year, the breakeven period will take longer.

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Update: As pointed out by a couple of our readers, resale value is important in this equation. While it wasn't mentioned, resale value was taken into account during the original calculation. The Prius C was launched in Australia during 2012, so the resale value of the Prius C and Yaris was taken from this date.

Both vehicles hold a resale value of around 65 per cent and sit within 1 per cent of each other.

The other discrepancy is regarding servicing costs. Toyota's servicing costs are only capped for the first three years. Given they are identical during the first three years, I have assumed that they will remain the same or similar for the duration of the calculation.