A few years back it was safety. Before that it was reliability. At some distant point in the past it was (maybe) performance. These days, the ever-fickle and typically totally misinformed car buying public is obsessed with mpg– at least according to AAA. And why not? Gas is flirting with $4 a gallon. Milk, egg, your gas bill, beer, Viagra– everything is up, up, up! The MotorAuthority reports that consumers are fighting back by purchasing more fuel-efficient cars. In other words, they're being rational rather than emotional. But how do you define rational? This past weekend a friend asked my girlfriend what the latter thought of her 2001 Ford Focus, a vehicle held together by duct tape and bumper stickers. The friend asking had a 2000 Ford Escort which fell apart in less than 100k miles. She currently owns a 1998 Ford Explorer. She's thinking about getting a new Focus. She's from Michigan, so she can only buy Fords. Or a Prius. Go figure.
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I (briefly) had a focus and got to watch the alternator eat itself at 31K miles.
On the bright side, without electricity, it was unable to set my garage on fire.
I just wheeled past the new Hyundai cars on the way in to work this morning, just for fun (though we’re not replacing our 2007 Sonata off lease until mid-year year).
Amazed to see that the Accent is only about 2 miles per gallon better than the Elantra, and taking city and highway MPG into account, the Elantra is only about 1.5 mile per gallon better than the Sonata four cylinder automatic (2009).
I believe a previous editorial on this very site reported that the number one largest hit to a car owner’s pocket is depreciation, even at $4/gal. Buying a new car that’s going to depreciate in order to “save money?” Ha, right. This is not such a rational decision after all, but just another emotional reaction to rising energy prices.
Edmunds.com has a neat “total ownership cost” prediction tool that makes certain assumptions (12,000 miles/year, maintenance costs, gas prices, future market conditions). If I remember right, they predict buying and driving a new Ford Focus will cost exactly as much over the next 5 years as buying and driving a 5 year old Toyota Tundra.
Edmunds.com has a neat “total ownership cost” prediction tool
It is an awesome toy. After playing with it, the conclusion that i’ve come to is that if consumers were rational, everyone would be driving around in a 3-year old japanese sedan.
Lots of people must really purchase on emotion before all else, the knee-jerk reaction to gas prices is no big surprise.
Ninja,
That’s because we Americans MUST have a new car! Can’t live without it. Just look at how many people suffer the payments each month. Many now justify the payment by mentioning the decreased fuel bills since they bought a Civic/Corolla or whatever that got better gas mileage than the paid-for Silverado they had. Umm..sure. While the fuel costs did go down, as mentioned, the overall costs of vehicle ownership most likely wind up going way, way up (payments, increased insurance, factor in depreciation). Most of us do not look at the total factors involved in car ownership and then wonder why we don’t see a huge savings at the end of the month. Again, the lower mileage is just a way to make them feel better about the purchase…
Was the placement of this news item next to the Durango review coincidence or are the editors having fun with us?
There is absolutely nothing wrong or illogical about buying a higher mileage new car to save money, provided that you were going to buy a new car anyway. There is no payoff equation so to speak of comparing fuel savings versus depreciation expense as the depreciation expense would have existed no matter what so long as one was going to purchase a new car anyway.
Nobelist Tom Schelling (econ, 2005) bought a Pinto after the second oil embargoes of the ’70s, seeking to save $. My father suggested to him that the gas savings might not compensate for the cost of buying a new car, and after doing the math, Schelling conceded the point. Gas isn’t all that much higher now than it was then.
I was surprised to notice on the Honda lot that the stick Civic actually gets better highway mileage than the stick Fit – 1mpg. Which would you rather drive?
Why buy a tiny car that gets no better mileage than the next size up. I’d love a new Fiesta, but the highway mileage better begin with a 4.
In the ’70s, it made much more sense to ditch that big sedan for a small car.
The typical owner of a just-paid-off 3-year-old ’70s car had an exhaust system, battery,and shocks on borrowed time. Chances are, he’d already replaced the bias-ply OEM tires with another set that now had less than a year to go.
And rust was already showing up in the wheelwells and was quietly chewing through the underbody.
Today’s 3-year-old gas guzzler is still a new car.
If my 10.5 year-old Ranger is typical, the owner has 7.5 years and counting on the exhaust, 5.5 years on the shocks/struts, a couple more on the battery.Little or no rust is evident in both the places you see and those you don’t see.
I’m only on my 3rd set of tires in 122,000 miles,so if the SUV owner (or should I say mortgagee) is typical he’s got another year to go on the OEMs.
Getting rid of a “new” 3-year-old vehicle that you owe 3 more years’ payments on makes little sense.
Keep in mind that another rational part of the decision is WHERE your transportation dollars end up.
Most people accept that owning a car for transportation is going to cost money. That money is broken down in to two parts
(1) Operation expenses (fuel, taxes, maint.,)
(2) Capital expenses (the cost of buying the car and interest on financing the car).
You have control over how that money is carved up. True, the total amount may be the same, or more. But you can change mix so more goes to the car company than the to fuel companies.
For me, I’d rather have a greater percentage of my transportation money goes to Japan than to Saudi Arabia.
In fact, I’d be willing to bet that a lot of people can rationalize an increase in transportation cost by knowing that they will, after 5 years, be sending less money to Middle East fundamentalist and to Latin American communists.
Nothing wrong with that. I’d love to be able to tell Saudi Arabia and Chavez to go pound sand, even if it costs me a little more out of my pocket.
I don’t see why everyone’s assuming that people are trading in old gas-guzzlers for brand-new cars with better gas mileage. I certainly haven’t seen it (but then again, I don’t work in car sales, so what do I know?).
I think Sherman Lin has it right: if you’re buying a new car anyway (even if that means a new-to-you used car), it makes sense to buy something more economical. When I needed to buy a new (used) car last year, I bought a compact instead of another mid-sized. When my in-laws needed to buy another car just this month, they opted for a compact instead of another minivan.
I have been pointing out the depreciation thing for a while now. I also had a lot of fun with the Edmunds tool. It completely validates my belief. Since most people end up buying close to retail and trading in at wholesale (or worse) there is rarely a reason to swap for better mileage. If you do 25k a year, maybe the math changes.
OTOH, if I were buying a new car today, I also would be looking at mileage more than I used to. Why? Reliability is not the differentiator it used to be. I think mileage may be important for resale values in the future, so you might as well look at it. Even with $80 a barrel likely coming back, I think that the value of efficiency will hold value better than it did last time around.
I was surprised to notice on the Honda lot that the stick Civic actually gets better highway mileage than the stick Fit – 1mpg. Which would you rather drive?
Actually, it would be a difficult choice for me. I like the versatile interior of the Fit. Seriously, though I get the point. Peopl focus too much on the mpg without taking into account the total cost of ownership and actually comparing cars in a holistic manner, including resale value and driving enjoyment.
Why buy a tiny car that gets no better mileage than the next size up. I’d love a new Fiesta, but the highway mileage better begin with a 4.
If it isn’t changed too much from the existing Mazda2 that it will reportedly be based on, it should get 40+ mpg, hwy. If they actually offered it with the 1.0L gasoline engine used overseas as the base engine, it would get 50+ mpg hwy, but what self-respecting American is going to buy a car with a 1.0L engine? I mean other than one with a clear understanding of what a sub-compact commuter car should be and why they are buying a Mazda2/Ford Fiesta in the first place.
“2001 Focus held together with duct tape and bumper stickers?” “2000 Escort that fell apart at 100k miles?” I hope not. I pray those are simple exaggerations….
Likewise, such stories as “My Camry’s clutch lasted 260k miles”, “my Accord has 150k miles with the same brake pads”, “I haven’t done a lick of maintenance on my 10-yr-old Nissan” are also statements that stretch credulity.
One thing I think people are forgetting is that new cars come with that big, nice, shiny Warranty.
While modern cars tend to be more or less reliable, when you don’t really have any money to spare, it’s always nice to know that you won’t need to have repair money set aside (save for tires, brake pads, and other non-warranty items).
From my personal research on cars as of late (I am in the market to replace my 22 year old Nissan before she starts having problems instead of after), it seems that the more reliable used “new” cars fall among the 15-16K range. For those of us (read: me) who don’t need anything more than a subcompact, it’s much more reassuring to buy a new car with a factory warranty for the same price as a used car that might possibly have half a year (in either mileage or time) left.
Of course, one could debate that you could just buy a “new” used subcompact for even less, maybe around 12K. The only problem with that is, around here, they don’t exist with mileage under 50K. That, or they include flame paint jobs with drop kits, a missing side-view, and quite possibly a hidden package of illegal drugs.
Sometimes buying a new car isn’t always a bad idea, or just based on emotions. It can make economic sense when buying a small car with little depreciation, but I also see plenty of midsized sedans go on sale with 1,500 miles, a factory warranty, and 8K off sticker.
Give the consumer choices!!!!!!!!!
Offer a Camaro that gets 25MPG and offer a ZL-1 right beside it.
offroadinfrontier,
Those of us who advise against buying new are not forgetting the warranty, we are just not valuing it as highly as you might be.
That having been said, if you plan to drive a car for 22 years, and you can pay cash, then there is nothing wrong with buying new at all. When you divide the money you might have saved by going used by 22 years, it just don’t matter.
Congratulations, you are the exception that makes the rule. Enjoy your new car.
OTOH, if you can’t pay cash, then no. You are better off saving your money and buying a beater until you can pay cash for a better car. Do the math. In fact, there are right now some lease specials that would be better than buying new for most people. The manufacturers are willing to eat depreciation that you would otherwise, if you bought.
Mileage? who cares! every time I go by a fast food drive through and there are car’s backed up or a starbucks drive through I just can’t help but think what would the gas price have to be for people to get there fat butt’s out and walk inside.We bitch about 4 dollar a gallon gas,lets figure what beer would cost a gallon,I know what mine cost about 10.00 a gallon. or lets say starbucks coffee,we really have some twisted thinking when it comes down to it.We have had it to good in this country for so long that we just can’t stand it if we have to give up a little bit now and then.I do feel sorry for the small percentage that just gets buy though and know that the cost of living is rough on them.When gas is 8.00 a gallon in Germany we should get on our knee’s in front of the oil Gods and think them for letting us have 4.00 a gallon gas.What do people think when they are buying trucks and suv’s? is there ever a cushion figured in when they buy how much they can afford to pay for gas when it goes up? Not!kind of like the home buyer these days.The oil companys are like the US Government,I don’t trust them, so don’t think they are going to feel sorry for us,the bottom line is what it is about.The high mileage car’s are great if that is what you need and won’t, but please park the car and walk when you can.
Landcrusher,
Well, you might need to spread your word out to the whole world and let everyone know that there isn’t a single new car deal out, unless you pay cash and expect to keep the car for 22 years.
That, or maybe you’re being a bit critical. One way does not work for everyone.
@offroadinfrontier
Hate to be the bearer of bad news, but Landcrusher is right on this one.
There are few reasons to get a new car over one that’s a couple years old. In fact, I can’t think of any. If someone does know a reason to get a new car over a used one, let me know.
Many people will buy new for emotional reasons, then come back and justify it later. That new car smell you’re paying for costs you 20% or more of the value of the car.
Here’s what people should do (and I know nobody will… oh well). When they get their next paycheck, take out a few hundred dollars. Do this every month as a down payment for a new car. When they have enough saved up from making interest free payments to pay cash for a car, they go and get what they want.
Thanks Dave Ramsey….err…Adonis.
All of us can’t do that yet. We’re still on Baby Step 1.
dwford- the Fit has better cargo capacity plus it’s likely easier to achieve better mileage with the Fit.
City mileage is more important
Economy will be a big deal for a year or so than everyone will go back to looking for safety or reliability or comfort or style.
How about this for a good reason – college student desperately needs a reliable, economic means of transportation. Lack of credit history = limited selection of vehicles. Between college and work, no downtime available, so can’t go with the el’cheapo at Dave’s Car Barn that will need work every other week. Stuck with new car at a tolerable interest rate.
Not all of us are financially capable of maintaining a car that “might” be reliable. We need cars that will BE reliable, or fixed under warranty.
Besides, did it ever cross your mind that, after paying our cars off, we might keep them? Buy a cheap, reliable car, get 5 years out of it, and pass it down to the next of kin.
While the car’s value depriciates, it doesn’t matter to someone who won’t be selling it anyway.
I “settled” on a Sonata after my ’97 Camaro decided to present me with looming repair issues that wouldn’t be prudent on a car with a KBB value of 2500 bucks.
Since I prefer manual transmissions, I wouldn’t trust the clutch of a used car; I’d be checking each 4 cyl candidate for the rub marks of a “fart can” on the back bumper.
With this new car, I can settle back and wait for the plug-in hybrid of my choice, while I sock away the cash for it.
And, since my car is likely to still be in the warranty period when I trade it in, it should have a less-than-shameful trade-in value; though I’m aware that a Korean car isn’t the best “investment” in that regard.
offroad,
If you are a student, how will you make payments?
If you can pay cash, buy whatever you want, just realize that you are paying a premium for not having someone else own it first. Even if the previous owner destroyed the clutch, you will save more in depreciation than you will lose in repairs.
I have posted on other threads my advice for new graduates. If you want it, I will rewrite it for you.
I will tell you that I have worked with car dealers, and I have trained their employees on negotiating techniques. You are much smarter than most of the people in the dealership, and they know that, and they will make sport of you. The two worst deals I ever saw were taken by a Supreme Court Justice and a CFO for an SMB. Go ahead and buy one of those new car “deals”, but I think you are likely overpaying for your education already. I know I did.
Overpaying for education might be true if it were possible to pay less, but it isn’t..
as far as “deals” go, like I said, I bought a Scion. It was as cheap as they come with my 2 requirements (Auto and ABS).