What is the best car for the buck?

 

Should you pay for a more expensive hybrid? If you have decided that all that matters in a vehicle for you is sheer economics than this question is for you. This question can be answered by simple math or difficult math depending on how you look at it.  What car will give you the lowest cost of ownership is the real question. There are a few factors we must consider. There is the initial cost. Fuel economy is huge right now, but not everything and it may change. Resale value will be a big deal as well but is often overlooked. Reliability will be an issue as well.

 

·         Initial cost – What will it cost you every month? Make sure you can afford the paying the monthly payment. It may save you in gas but if it $100 higher each month in payment it may be too high for your budget.

 

·         Fuel economy – This one is huge right now and it sounds like it may be here to stay and may even get worse. This is just one part of the equation.  Purchases should not be made on fuel economy alone. What you need to realize is the less mileage you drive the less weight this should have on your decision. The more you drive the larger factor this becomes. The more you spend at the pump the more this will affect you. Please understand that this is just a factor. Fuel economy is just one part.

 

·         Resale value- This is the most important part that always seems to be overlooked. The majority of the people I have spoken with never consider this. It is hard to know what the market will do in three or five years from now but most cars are pretty consistent with resale value. Generally the more reliable or rare the car is the better they are at resale. Which is why the Japanese makes, especially Toyota and Honda do so well. They have a reputation of reliability. Sports cars tend to do well also simply because there are substantially less of them.  Resale value can be affected by you, the driver as well. Did you keep it well maintained and can you prove it with records? Did you put a ton of miles on the car? Did you wash it and wax it regularly? The better looking that car is the more you will get out of it in the end.

 

·         Reliability- This is a big issue many people overlook as well. You can avoid costly repairs by just owning the vehicle while it is under the factory warranty but the reliability will affect you when you go to sell or trade it. People will give less money for a dime a dozen poorly built vehicle even if you took great care of it. Buying reliability in the beginning is always a plus. Just make sure you get your money back in the end.

 

Now that we have discussed these factors let’s apply them to a few scenarios. The number one selling hybrid out there is clearly the Toyota Prius. It will run you anywhere from $24,000 to $28,000 on the sticker. From my research it will take three to six months to get the car and many dealers want more than sticker for them. The cars are decent sized but I find it difficult to see much more car there than what a Toyota Corolla offers. You’re looking at an $8,000 difference. Will this Hybrid save you more than $8,000 in the next few years in fuel economy? Maybe, maybe not, the way to know for sure is to calculate the mileage you drive each week, month or year and divide that by the miles per gallon each vehicle gets and then multiply by the average cost for a gallon of gas. Once you have the calculation then multiply that by how long you plan on keeping the car. This is just the fuel economy factor. Be sure to look at resale value as well.

 

The Prius right now has an unprecedented resale value. There are many dealers asking more for used current year to 1 year old low mile Priuses. Which means the resale value should be very strong. This can change as soon as gas prices drop however that does not look like it will happen anytime soon. Based on what we have discussed if you drive average miles or less, it is safe to say a hybrid Prius is a good buy. The other vehicles that come in a hybrid and regularly aspirated engines are not near as good of a buy. I have yet to see one improve the fuel economy enough to make up for the cost. These types of vehicles are the Ford Escape Hybrid vs. the Ford Escape, the Toyota Camry Hybrid vs. the Toyota Camry, the Honda Civic Hybrid vs. the Honda Civic, the Chevrolet Tahoe Hybrid vs. the Chevrolet Tahoe, etc. Most of these vehicles do very little to no better on the highway.  Unless you are doing a majority of city driving you will not benefit enough to justify the extra cost.

 

                If you happen to drive a large amount miles per year, say 25,000 or more, a hybrid is probably a bad to horrible idea. The reason being, that you will destroy the resale value by having a vehicle with no warranty and a high potential for a very expensive repair. High mileage driving will remove the strong resale value as well. If you are in that situation and you want the best bang for your buck, nothing is better than a three year old Toyota Corolla or Honda Civic. Drive it for three or four years and then replace it with another. This will minimize the loss and give you the best value for your buck.

 

I hope that helps!

~ by wilsonmy on July 13, 2008.