Dealer markups of hybrids can erase ownership cost advantages

Dealer markups on hybrid cars—plug-in or not—are getting steeper, which could cancel out the decrease in ownership costs afforded by their increased fuel efficiency.

CarsDirect

reports that one California dealership has added a $10,995 markup to the redesigned 2023 Toyota Prius Prime plug-in hybrid, bringing the advertised price from $36,649 to $50,644 before taxes and fees, as well as any dealer add-ons.

Another California dealership has put a flat $3,000 markup on every Honda Accord Hybrid and Honda CR-V Hybrid in stock, but is not applying markups to non-hybrid versions, according to CarsDirect.

Certain hybrids are also receiving higher interest rates, CarsDirect reports. According to a dealership bulletin, Hyundai is offering rates as low as 0% APR for non-hybrid versions of the Tucson and Santa Fe, but a much higher 5.99% APR rate on the hybrid and plug-in hybrid versions.

These markups could erase the ownership cost advantages of hybrids. In addition to better fuel economy than equivalent non-hybrid models, hybrids have had lower repair costs overall versus non-hybrids, going back many years. A 2015 study

found that hybrid repairs were already getting cheaper compared to other cars. A 2020 study found that low ownership cost was part of the reason why Toyota hybrid owners keep their vehicles so long.

Prices on used hybrids or all kinds surged last year, and haven’t yet settled to their previous levels, so that may not be a viable alternative to marked-up new cars. On the new-vehicle front, if you can navigate the markups, there are some impressive ownership-cost values that pack 40 mpg and all-wheel drive

for under $30,000. And taking advantage of hybrids’ Eco mode may help provide payback sooner by maximizing mpg.

For many shoppers, however, EVs will have the lowest long-term ownership cost. For the moment, there appear to be more deals available on EVs as well, although that can always change.