Sunday, January 11, 2009

Passing gas (stations)

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We use less gasoline than most of our friends. With the office a mere half mile away from our house, and the bank, cleaners, post office, drugstore, deli, supermarket and liquor stores (five, to be exact) all within a one-mile circle, we could drive a Hummer and still spend less at the filling station than the average Joe.

Speaking of which, a guy in the office building behind us used to drive a Hummer. He quit doing that when gas hit $3 a gallon. I miss looking out my window and having the entire view taken up by the grill of his Arnoldmobile.

Several of our friends and clients own Toyota Priuses (I have no idea how to pluralize this name—maybe it should be Priui) and I have to say they feel really good about themselves. Who wouldn’t when you can drive to Bolivia on two tanks of gas?

We, on the other hand, are still driving our 1997 sedan with 185,000 miles on it. (More on this at http://randyhuntcpa.blogspot.com/search/label/Diary .) Since Mary and I work together, we’re able to share this car, which gets about 27 MPG highway and 22 around town.

Someday, however, this car is going to reach the point where maintaining it is more expensive than replacing it. I argue that replacing your vehicle with a new one cannot be cheaper, ever. Too much depreciation right off the bat. Ever try to sell a brand new car back to a dealer? Somehow, that first hundred miles reduces the value by a couple of thousand dollars. Not only that, but those $400-a-month payments you avoid by hanging on to your junker translate to $4,800 a year in repairs before buying new makes sense.

Mary argues that the decision should be made on other factors, such as maintaining the quality of our marriage. She doesn’t appreciate my optimistic view that our car will go another 150,000 miles. If history is an accurate predictor of the future, we’ll probably be in the market for a new car sooner than later.




So I started researching possible alternatives. I actually rode in a Toyota Prius. Roomier than I would have guessed. And everyone I know who owns one swears by it. When I ask how much replacing the battery is going to cost, I’m met with a range of answers from $2,000 to $3,000 to “I hadn’t thought about that.”

Is the 48 MPG city and 45 MPG highway (yes, I’ve got those figures in the right order—see http://www.fueleconomy.gov/feg/FEG2009.pdf) enough to justify a $3,000 battery replacement after 100,000 miles? Let’s see: The cost of fuel for 100,000 miles of driving at $2.50/gallon is about $5,200 at 48 MPG. Adding $3,000 to this cost is the equivalent of getting worse gas mileage, or 30 MPG.

There are plenty of conventional gas engine cars that do better than that, which you can also expect to run well over 100,000 miles before needing expensive repairs; the Toyota Corolla and Honda Civic to name just two. The Prius pollutes less, I suppose, and you get that good all over feeling being part of the hybrid club. It’s like being a Harley owner without the leather.



The other alternative I considered is called the Smart ForTwo. It’s a two-seater that traces its roots back to Mercedes-Benz and Swatch, the Swiss watchmaker. (See http://www.edmunds.com/insideline/do/Features/articleId=117630.)

This is a glorified golf cart with an engine about half the size of the one on my brother’s old motorcycle. It gets 33 city and 41 highway, not exactly impressive numbers for a vehicle you can drive from the street right on to the front nine without turning a head. And Consumer Reports rates it 28 on a scale of 1 to 100, earning the lowest score in the entire category of subcompact cars. It has basic car-like components, like a steering wheel and four tires, but so does my grandkid’s Cozy Coupe II.


As you can see, I’ve done exhaustive research on potential replacements for our trusty 1997 automobile and it leads to the indisputable conclusion that we should keep it until the odometer rolls over to a quarter million miles. At that point, I’ll initiate another comprehensive analysis of our options and report back to you.

P.S. Please don’t let Mary know I’ve written this column.

Copyright 2009 Randy Hunt

3 comments:

  1. Randy, given the course you have decide to take, I only suggest you update your AAA service contract for under $60, as you never know with an 11 year old vehicle. Frank

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  2. Yes, there is a very good reason that you are an accountant Randy!

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  3. Thanks for at least pointing out what everyone else loves to leave out, the cost of the batteries on these hybrids. I live in the country where my nearest store is about 6 miles away (where I can hopefully buy staples that aren't expired). However, real civilization is much further, and I could easily drive 100,000 miles in 2 years. So I am looking at a $2-3k premium for the car, $2-3k every other year in batteries (not including premiums charged for other maintenance because either its a hybrid or I am a woman) for maybe $1k in annual gas cost savings. No thanks. I will wait until there is enough time to accumulate real data on the maintenance costs.

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