How Owning a Toyota Prius Adds to Your Reputation—and Wallet
A Toyota Prius sends a message. It tells the other cars on the road that its driver probably shops at Whole Foods or Trader Joe’s with reusable grocery bags, doesn’t have a hummer for a second car, is eco-conscious.
“When you see people drive a Prius, you have a certain perception of them,” said Kashef Majid, a former Kogod instructor and current visiting professor at George Washington University. “But you don’t have the same perception about hybrid Honda Civic drivers.”
A Toyota Prius is distinct; there is no gas-guzzling, non-hybrid version of a Prius. a Honda Civic, on the other hand, can come in hybrid and non-hybrid forms. And that can make all the difference to a buyer.
“A huge component of why we buy certain things is symbolic value—what it communicates to others about us,” said co-author and Assistant Professor Cristel Russell.
Hybrid cars that have non-hybrid alternatives, like the Civic, lose value faster than hybrid cars that have no alternative, like the Prius, according to a recent study by Majid and Russell, with support from Alexandra Golomb, BA ’12.
“A hybrid car loses [resale] value faster if there is a non-hybrid alternative because hybrid technology is rapidly changing,” Majid said. “With a Prius, technology is changing, but you’re still driving a Prius; you’re projecting an image.”
Their findings provide crucial information to manufacturers of green products: It’s not enough for a product to simply be green. Marketers need to develop the consumer expression angle as well.
“Simply adding a green component to a product and not allowing people to express themselves through consumption of it, that limits you,” Majid said. “You’re not getting the full value of it.”
It’s Not Easy…
In theory, a hybrid car should retain more value to consumers over time. Hybrids are often seen as an investment, one that cuts the cost incurred from paying $4 a gallon at the pump. But hybrid technology is less than 20 years in the making. Only now is the industry beginning to achieve an economy of scale, and the technology is developing quickly.
“Technology is evolving and people are still skeptical of it, of the maintenance costs,” Majid said.
As part of an independent statistics project, Golomb talked with local dealers and examined National automobile Dealers association data on the sales of 10 models of hybrid cars: Ford Escape, Ford Fusion, Honda Civic, Honda Accord, Honda Insight, Mercury Milan, Nissan Altima, Toyota Highlander, Toyota Camry, and Toyota Prius.
By comparing sales of used hybrids with sales of their used non-hybrid alternatives, the researchers found that hybrid cars lose value faster than non-hybrids.
“There are really two competing arguments here,” Majid said. “One is that it saves money, so it should have a greater value as you go along. and two, it’s an evolving technology, and every newer version outdates the previous version. Retain value, lose value.” Hybrids, moreover, may soon be replaced by other technologies, such as fully electric or diesel-powered vehicles. Thus, the introduction of a new green technology cannibalizes the old, and the hybrid model loses some value.