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#4731 of 5290 Re: Blunder by Consumer Reports in Hybrid Car Cost Comparison [markjenn]
Mar 07, 2006 (5:13 pm)
Since there are so many valid sources which can be checked by anyone in the business, its shocking that CR could make such a basic error. The best source is the summary online of the Mannheim Auctions. This is the real market value of a used vehicle because it's what it will bring in cash on the spot. Dealer and Retail and P-t-P sales are often colored by emotion and need.
Auction sales are just cold cash for a hunk of iron. Edmunds TMV's on used cars here are a pretty good approximation of the auction values on most cars.
2002 Prius with 50K mi has a TMV trade in of $11500 in avg condition. This is about 50+% of the original purchase price back in 2002 of ~$22500. In general Toyota's hold about 50-55% of value after 50K miles. The Prius is no different.
4 yr depreciation 50K mi
Corolla LE ( $16000 new ).. ~ $9000 depr ( $7000 tradein )
Prius ( $22500 new )........ ~ $11000 depr ( $11500 tradein )
Camry LE ( $20000 new ).. ~ $11000 depr ( $9000 tradein )
There is only one depreciation number and it's the difference between the original sales market price and the current auction values. Everything else is supposition.
ON the face, it appears to be lazy analysis by the writer and editor. Not enough digging and verification - just get something into print. Or it may be intentionally slanted.
#4732 of 5290 Agree CR is wrong but...
Mar 07, 2006 (5:46 pm)
It also depends on how you look at the analysis. You have assumed that we should look at it from an accountant's point of view or that we are selling all vehicles at the 5 year mark. Assuming that the vehicles will be kept beyond 5 years and you are only looking at the expenditures up to the 5 year mark, CR is still wrong but you would use just the purchase price and not the depreciation. The difference in that case would change to the following.
Ford Escape: $8350 >> $2050 >> $3550
Honda Accord: $10250 >> $4550 >> $5950
Honda Civic: $3700 >> ($300) >> $800
Lexus RX: $13100 >> $4300 >> $6800
Toyota HL: $13300 >> $6100 >> $7300
Toyota Prius/Corolla: $5250 >> ($450) >> $2050
I am saying that CR is wrong. You guys have looked at it the best normal accountant's way, but CR could be assuming the car will continue to be used and the difference in car market value will not be realized at the 5 year mark. Thus the greater cash outlay would be seen for hybrids if not sold at the 5 year mark for all the hybrid models.
#4733 of 5290 Re: Agree CR is wrong but... [bamacar]
Mar 07, 2006 (5:54 pm)
If you are not selling the car at the 5 year mark, then you need to re-calculate all the other figures too, e.g. what is the gas savings over X years?
You could only use the purchase price difference and not depreciation if the car has no value when it is sold. It would need to be very old for that to be the case.
Using CR's methodology, here are some estimates for years 6-10 for the Corolla vs. Prius:
At end of 5 years: (450)
Gas savings: (2300) (assumes same price as in yrs 1-5)
Extra insurance: 300
Extra maintenance: 300 (assumes no battery replacement)
Extra depreciation cost: ??
Net cost difference after year 10: (2150)
That is, the Prius saves $2150 over 10 years compared to the Corolla before any extra depreciation cost for years 6-10 and any battery replacement cost are factored in. CR notes that the batteries have a 150,000-180,000 mile life expectancy, so a battery replacement in the first 10 years is not a given. Also in the CAFE states, the battery is warranted for 10 years and 150k miles.
BTW, to be much more of an apples-to-apples comparison, CR should have compared the Matrix to the Prius.
#4734 of 5290 Re: Agree CR is wrong but... [backy]
Mar 07, 2006 (6:11 pm)
I am not saying how many years the vehicles will be kept. I was just saying that my numbers would be the total outlay of money at the 5 year point assuming the vehicles are not sold at that point (not the normal accounting method).
#4735 of 5290 Re: Agree CR is wrong but... [bamacar]
Mar 07, 2006 (6:24 pm)
Ok, got it.
BTW, maybe CR didn't compare the Matrix--a 5-door hatchback very similar in size to the Prius (another 5-door hatchback) because the comparison would not have been as much in favor of the ICE car. The MSRP of a Matrix XR equipped as much as possible like the Prius (automatic, alloys, ABS, cruise) is $19,220--$2600 more than a Corolla LE. Also, the mpg of the Matrix is 5 mpg less (24 vs. 29).
#4736 of 5290 Re: Agree CR is wrong but... [bamacar]
Mar 07, 2006 (6:31 pm)
True but you must balance it by the value of the asset you have at the end of 5 yrs.
#4737 of 5290 Re: Agree CR is wrong but... [kdhspyder]
Mar 07, 2006 (6:59 pm)
Once again for accounting purposes- yes, you are correct. For outlay of cash in the 5 year period, no. If it is not sold at the 5 year mark, you receive $0 dollars no matter what it is worth.
#4738 of 5290 Re: Agree CR is wrong but... [bamacar]
Mar 07, 2006 (7:09 pm)
I did see that but what does it mean? An Explorer or an ES 330 also generates significant initial out-of-pocket costs in the first 5 yrs. There are no conclusions can anyone draw from this data.
#4739 of 5290 CR agrees that is was wrong
Mar 07, 2006 (7:14 pm)
CR now says Civic and Prius Hybrid will save money
Consumer Reports now says it made an error when calculating the cost of owning a hybrid: Owners of the Toyota Prius and Honda Civic hybrids do save money, the magazine said today.
The new calculations show that owners of the Toyota Prius will save $400 and owners of the Honda Civic will save $300 when compared with gasoline-only counterparts. Owners of four other hybrids -- the Honda Accord, Ford Escape, Toyota Highlander and Lexus RX 400h -- will still end up spending $1,900 to $5,500 more during five years of ownership and 75,000 miles, Consumer Reports said.
CR makes errors all the time, they rarely fess up.
#4740 of 5290 Hybrid fatigue
Mar 07, 2006 (7:17 pm)
Ford's Hybrid struggle
As hybrids become plentiful, buyers become scarce.
The "techy" crowd willing to open their pocket books for an American-made hybrid has already been satisfied, said Acton Ford President David Abatsis, based in Acton, Mass. Abatsis says consumers were initially willing to swallow the premium that is charged for a hybrid, but noted, "That group is gone." The sticker price on a hybrid is typically about $3,000 higher owing to the need for an expensive battery, specialized transaxle and sophisticated braking system.