Fuel efficient cars won’t always save you money

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While cars are some of the worst investments that can be made, the necessity to travel long distances for daily activities pushes need ahead of investment. That doesn’t stop many from viewing it as a long term “investment.” Many view the value in a car over many years and compare a combination of cost, maintenance, and fuel efficiency.

Fuel prices have surged and there are already some locations with fuel prices starting at $4 per gallon. As a result many are starting to look towards more fuel efficient cars in order to balance out the increase in fuel prices (Although some are doing it in an effort to help the environment).

However, buyer beware! Having a higher gas fuel efficiency does not always equate to saving money. I’ve collected data from various manufacturer websites and I am comparing based on figures given by the manufacturers themselves. Be aware, that real-world application will vary, as efficiency is heavily dependent on driving style, location, and general traffic conditions. I also do not take into account any unforeseen maintenance costs, options added to models, taxes, etc. I also took the average between city and highway driving fuel efficiency.

The gas/electric hybrid cars have been highlighted in green. As we can see, although they theoretically will use much less gas over 36,000 miles, the premium price paid for those models seem to outweigh any benefits from using less fuel. I added theoretical costs if gas was at $4, $5, and $6 a gallon on average for the entire 36,000 miles.

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Interestingly enough, even when I up the mileage to 72,000 miles, the overall cost positions do not change much at all.

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When comparing cost per HP, it is actually the hybrids that cost much more per HP. In fact, the Toyota Prius Two costs more per HP than the Nissan GT-R!

What we have to realize here is that having a higher MPG rating does not necessarily increase overall cost efficiency. While the more fuel efficient cars may eventually prove to be the most cost efficient, the question is how long will that take? 5 years? 10 years? Will the car even last that long?

Comments
9 Responses to “Fuel efficient cars won’t always save you money”
  1. Eddy Harsh says:

    Great charts, Gian. This emphasizes a fact that many people aren’t aware of. If your primary motivator behind purchasing a hybrid is the cost savings over time, you would actually almost always be better off just purchasing one of the many low-cost non-hybrid economy cars out there. Although they like to tout fuel saving as one of the primary reasons for which they bought the car, I think that most hybrid drivers drive the cars simply because they like the idea of driving a hybrid. Not that there’s anything wrong with that – there are many other great reasons to drive a hybrid and as long as the demand is there the technology will (hopefully) keep improving.

    Another interesting fact about hybrids is the fact that most are sold by their manufacturers at a loss.

    • Gian Sorreta says:

      I’m actually in the market for a new car, but with rising gas prices I was also inclined to research if I would actually save money by getting a car with higher fuel economy.

      I was not aware hybrids were sold at a loss, although it does make sense because it used to be subsidized by tax dollars.

  2. Jessica says:

    I was listening to the radio today and they were talking about people trading in their gas guzzling SUV’s for Hybrids but they were saying that financially these people weren’t saving any money in the long run.

    • Gian Sorreta says:

      I think I caught part of that segment :) I do know there is a portion of buyers that aren’t necessarily looking to save money, but are making efforts to do what they believe will help the environmental. There are also those that are doing it mainly for image purposes, but in both cases it seems cost is secondary.

      I personally tend to look at things a bit differently, but hey, it’s a mostly-free country, right? 😉

      • Mike says:

        I’ve been recently intrigued by the Lexus CT 200h at about $30,000 and at 42 mpg…its seems like a good option. Basically a semi-luxurious Prius.

        Regarding the chart, its great info, but I think most people will front a few extra bucks to avoid driving a Kia Rio. There’s also ‘true cost’ of a car as well, like insurance, avg. repair and maintenance costs.
        I would imagine a base Civic would be tops in terms of overall affordability.

        With the higher initial cost of hybrids, you can also think of the opportunity cost of that extra $$…but that might be offset by the fact that hybrids tend to have better residual values…for now.

        • Gian Sorreta says:

          Very good points. I personally wouldn’t want a KIA Rio if I could afford a better car.

          We can probably look at this as the “least amount” or “base amount ” of money one will be paying over a set number of miles.

          True cost of a car will definitely be harder to calculate. Insurance costs depend on car depreciation rates, driving records, ages, genders, etc. Hybrid cars will also have inherent added maintenance due to batteries and such.

  3. Interesting article Gian. I come from the belief taught by my dad, that if you buy a car you run it till its ready to break. Hence I drive a gas guzzling truck with 150k miles. :(

    I would be curious how the total cost of own of the cars in your list would look if the the mileage was pushed to about 120k and the expected resale value, after 7 years, was calculated in. I’m thinking the Honda Civic and Toyota Corolla would be at the top.

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