Green Car Analysis - Honda Civic edition
After our last comments discussion of the green car market, I want to present a comparison of hybrid vs. non-hybrid vehicles using the Honda Civic as an example.
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I am looking forward to this discussion as my wife and I are currently looking for a Honda Civic. Sure, we care about the environment, but up front and on going costs are more important to us.
ReplyDeleteAaron you and I both drive Civics I believe. Mine is an '02 base model with 80k miles, and it runs FANTASTIC. I speak very highly of my experience with Honda - this thing is practically bulletproof.
ReplyDeleteUsing Honda's comparison feature on their website, you get the following base MSRP for "comparably equipped" new Honda Civics in both standard and hybrid drivetrains:
Hybrid = $23,650 - EPA rated 42 mpg
5-speed auto = $18,855 - EPA rated 29 mpg
The price difference between the two cars is $4,795. The mpg difference is 13 mpg.
What do you want to assume for the average price of a gallon of gas, to do our math? I am going to vote for $3/gallon; we are in CA after all.
By this math, the price difference between the cars is worth 1,598 gallons of gas. We will call it 1,600 for rounding.
At these prices, you have to drive the hybrid 67,200 miles to amortize that price gap.
I personally drive between 15k - 20k miles each year, so it would take me about 4 years to make this cost back.
Now, the "average" gas price in the U.S. is apparently $2.50 right now. To those lucky souls paying that, it would take 1,918 gallons to pay back the "hybrid tax" on the Civic - the equivalent of 80,556 miles driven.
ReplyDeleteSo at the normal average of 12k miles per year, it takes 5 years in California and almost 7 years across the country.
ReplyDeleteI know when I get a Honda, I plan on keeping it for 10-15 years, but I wonder what the average length of car ownership in the US is?
Two other things:
ReplyDelete1. You can get a sedan version of the non-hybrid Civic for less than $18.8k. It has fewer features, but if you're being cost-conscious then it's on your list.
Say you get the Civic DX (hate their trim-naming system) for $16,305 base MSRP. Now your cost difference is $7,345.
This is the equivalent of about 2,450 gallons of fuel at $3/gal. Now you're talking 102,900 miles to make up that price gap. That's big.
2. Based on this comparison on the Honda site, the comparably equipped models from my first example are almost identical in terms of retained value and estimated maintenance costs.
ReplyDeleteThe regular LX model projects $2,120 5-yr maintenance costs, with a 3-yr residual value of 57% and a 5-yr residual value of 36%. The hybrid model projects $2,019 5-yr maintenance costs (lower somehow?), with residual values of 56% and 34% after 3 and 5 years.
However, it's probably too early in the game to know if these hybrid values and maintenance costs are accurate, as they haven't been around a long time. I also question if repair costs will be as low as standard Hondas - I can't imagine hybrid-specific repair parts are as plentiful or as cheap as normal Honda engine parts.
What are your thoughts?
Based on a a Google search for length of ownership, it appears 5 years is about the average length of ownership. I bet it's longer after the recession however.
ReplyDelete"The best statistical analysis available on the web seems to be a study of the Salt Lake City market by the local newspapers. It shows that 53% of buyers expect to keep a car longer than 5 years; 42% longer than 6 years. The statistical average in the survey was 5.5 years." (link to this reference for more detail)
So you are correct, budget for 5 years to recoup the cost. Assuming there is no difference in durability. I would argue that resale value maybe quite a bit higher than the standard Civic in 5 years, when it comes to sell these. These hybrids are lower volume and will be in higher demand in the future, so cheap used versions should have higher resale value. Of course that's all speculation on my part.
What if gas returns to $4/gal? Do you think that's possible?
In that scenario, the price gap accounts for 1,200 gallons = 50,400 miles on the hybrid to amortize. Just over 4 years at your 12k/yr driving rate.
I think you need to be careful, because that study references how long people expect to keep a car upon purchasing, not how long they actually keep the car.
ReplyDeleteYeah that's a good point. My counter (to take Simmons' favorite phrase) is who cares what the average length of ownership is? It's a personal situation and a personal decision whether you want to pay up front for long-term savings or whatever else.
ReplyDelete