May 27, 2008
More Cars
I'll continue my rant about the automobile for another day.
No matter how I do the math, buying a new car makes no sense. MY 1999 Civic is in perfect condition and gets 30 mpg in everyday driving. I think I could sell it for $6500 and buy an new Honda Civic Hybrid for about $25,000 including tax and license. The net cost to me would be about $18,500.
Since I drive about 6500 miles per year, at 30 mpg, I will use about 217 gallons of gas this year. At $3.75 per gallon that's $812 on gas. Driving a 40 mpg gallon hybrid would drop my annual gas cost to $610. Using the $202 annual savings, it would take me 91 years to recoup my $18,500. At $5 per gallon it still takes 68 years.
Of course, if you owe a lot of money on a gas-guzzler, the math is different. Maybe trading the big debt for more fuel efficient debt makes more sense.
Understanding the math, it makes a whole lot of sense to buy a good late model used car, one that gets 25 mpg in town, over an ultra fuel efficient hybrid. And the way the market works, good used cars can be had fairly cheaply.
Squirrel asked in a comment yesterday about my thoughts on the Toyota Prius.
The Prius is a fabulous vehicle as nearly as I can tell, especially if you do lots of in-town driving. The in-town mileage is in the high forties. People that I've heard talk about the driving experience, seem to love it.
One concern about hybrid vehicles used to be the batteries. According to an interview that I heard recently, the batteries, even in the oldest Prius have held up. That's seven years. As I understand it, the manufacturer is required to warranty the batteries for ten years, under emissions legislation.
The problem with buying a Prius is that it is a dealer's market. The car dealers are gouging the public because demand outstrips supply. Toyota dealers are among the worst historically for squeezing the consumer, because they are selling a premium product.
When it comes to buying a new car, there is really no reason to have to go through the whole car buying experience and its incumbent hassle. The are a couple of ways to use the internet to avoid the creepy guys and gals in the salesroom.
If you have never checked out carsdirect.com, it is worth doing so. This site provides you exact information on the cost that the dealer paid for the vehicle, its MSRP and gives you a price that they will buy it for you.
In my post yesterday, I mentioned that I can get the Civic EX for $19,339 using either Car Direct or the dealer's internet salesman. The dealer pays the manufacturer $18,739 for the vehicle. On the surface the dealer looks to make $600. What most people don't know is that the dealer has a hidden profit in the form of a manufacturer's holdback.
Most cars and trucks have a 2-3% additional profit from the manufacturer when the car sells. For my Civic, the MSRP is $20,145, the dealer will get a payment of 2% or $403 from Honda when they sell the car. This is in addition to all the money they can squeeze out of the consumer.
Above all, keep the deal simple. Don't buy anything from the dealer except the car. No insurance, extended warranty or dealer arranged financing. Keep a trade-in out of the deal.
Things in this blog represented to be fact, may or may not actually be true. The writer is frequently wrong, sometimes just full of it, but always judgmental and cranky
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5 comments:
AAA has a deal where they pre-negotiate a price for the vehicle you want, then you say yes or no. I tried it once, but they ended up directing me to a guy at the dealership, exactly what I wanted to avoid.
I'm a total cheapskate, but I'm debt free because of it. I've always bought used cars from regular people in the newspaper. I know there's no warranty that way, but if you're careful and a little knowledgable about what to look for I feel it's worth the risk, especially if you're like me and prefer not to get a loan. My most expensive car ever is my current one that cost $3500 six years and 40,000 miles ago. My cheapest car was a horrible old Chevette. It was pure rust, no a/c, and once you rolled the windows down you had to take the door apart to put them back up again. I just left them down in the summer and attempted to cover it with plastic in the rain. Someone gave it to us for free. We push started it to get it home and replaced it with a $70 starter. That car would not die. We finally gave it away and bought another used car when I was about to have a baby because I didn't want to drive him around in that thing.
With fuel prices sky-rocketing and all, Nashik a small town in India, is facing acute fuel shortage. Pumps have put up boards that say "Out of Stock" for days now. Check out the full article here:
http://finance.indiainfo.com/2008/05/28/0805280941_fuel_crisis-oil_companies.html
I used that AAA-negotiated price when I bought my last Honda (in 1994). It worked pretty well. I traded a car in, too, and I have to say, that wasn't bad either. I probably could have gotten more if I'd sold it on my own, but I figured it was worth it to trade just to avoid the hassle.
Dennis just sits in a box or laundry basket and pretends it's a sportscar. vrrroooom.
Works for Dennis!
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