Car Shopping Part 1

Today I started car shopping seriously. One of the top cars on my list is the Toyota Prius. However, with gas prices having gone up so much lately, demand is much higher than it was a few months ago and dealers want full MSRP sticker price. In the Southeast all Toyota dealers will also charge a “doc fee” which is $599. I will also have to pay 7% in sales tax. The good news is that tag and title are only $21. As long as I order the car in advance I can get whatever color I want and avoid dealer add-ons like Toyoguard which add hundreds of dollars more (Toyoguard alone is $699 almost all of which is profit). But there is a 4-8 week wait. One dealer admitted they are asking $1995 over MSRP, but the norm seems to be right at MSRP. The Prius with Pkg 2 options then is $23,799 plus $599 doc fee, $1707.86 in taxes for a total of $26,126.

Vexed by Prius prices, I thought I would try the lesser known Honda Civic Hybrid. It gets close to the mileage of the Prius. Also, because they sell fewer of these, it still qualifies for the government tax credit of $1,050 up until June 30 (it was $2,100 until December 2007 and drops to $525 July 1; next year it will go away completely). Using Edmunds.com I sent a notice to 4 dealers that I was interested. Two called me back and said the Civic Hybrid can not be had for less than MSRP. Total with taxes would be $25,523 (but I’d get $1,050 back when I file my taxes). They both advised I would be better off with a Honda Civic EX or LX. The EX and LX are exactly alike except that the LX does not have the sunroof or alloy wheels and has a 4-speaker audio system instead of 6-speaker in the EX (so you’re paying $1,700 for a sunroof essentially; when I bought my current EX it offered a bigger engine and anti-lock brakes in addition to the sunroof). The EX and LX are selling for the invoice price ($17,221 and $15,616 respectively for a total of $19,532 and $17,816 after fees and taxes) and have 1.9% financing available for up to 36 months or 2.9% for up to 60 months of financing. I don’t know that I want to finance the car, but if it’s that cheap, why not? I wouldn’t do more than 36 months regardless.

So, while the MSRP and invoice prices of hybrids are only $3,000 or so more than non-hybrids, the actual buying price difference is more like $5,000.

What are the savings? Consumer Reports says the average mileage of the Prius is 44 miles per gallon, the civic hybrid gets 37 mpg, and the regular civic gets 31 mpg. I’ve put about 100,000 miles on my old car in 10 years. So for the life of the car the gas (assuming $3.80 per gallon) will cost $8,636 for the Prius, $10,270 for the Civic Hybrid, and $12,258 for the regular Civic. The gas savings for the otherwise equivalent Civic Hybrid and non-hybrid are only $2,000.

Using Consumer Reports overall mileage (non-hybrid mileage seems suspect at 31 mpg and people report better mileage with the Civic hybrid):

Using EPA city mileage (reduced some for the Prius because 48 doesn’t seem realistic, so I used 44 instead; most of my miles are probably city driving):

The second table indicates the increased mileage pays for the hybrid premium over 100,000 miles. At that point you may need to pay $3,000 for new batteries for a hybrid which is not included. Also that’s over 10 years, so the present value would reduce the gas savings. And if gas goes to $5 a gallon, then the hybrids really start looking good. The price of the Prius being higher than the Civic is okay given that the Prius is a little bigger than the Civic. If I’m paying MSRP anyway, I would probably choose the Prius over the Civic Hybrid.

Lastly, Consumer Reports also likes the Mazda3, a small sporty car that has more zip than the Honda Civics, has a little worse mileage, and seems to cost about the same.

Continued in Part 2