Long-Term Thinking: "Cost to Own" mindset grabs hold
2011 Chevy Volt - Click above for high-res image gallery
So many things are changing in the new automotive reality, it's hard to know where to start. Everything from the kind of hose we connect to our cars (liquid filled? electric?) to the sounds the vehicles make is different now than it used to be. What else needs to change? How about how we think about how much it costs to own and operate a car. Naturally, it's always been possible to estimate this cost, but NADAguides.com has just released a "Cost To Own" calculator for new cars, so you can factor in fuel prices in your region into the cost of the car. It's entirely useful. For example, to own a 2010 Prius in Michigan for five years will cost an estimated $33,232. On top of the cost of the car, NADA tells us that the car will depreciation will make up 39 percent of the ownership costs, while fuel equals just 12 percent. A pie chart of the cost breakdown is pictured at right.
On a similar thread, Edmunds is recommending a shift away from MPG and towards a cost-of-energy window sticker on a new car. With all of those electric plugs being added to cars, MPG is becoming less and less valuable to understand how much it costs to get around. Two quick examples: per month, Edmunds estimates it'll cost $53.55 to drive the forthcoming Chevrolet Volt, but $66.78 to operate a Prius. Check out their chart here, and remember that according to a recent study, more efficient vehicles can (and often do) cost less.
[Source: NADAguides.com, Edmunds]
PRESS RELEASE:
How Much Will That New Car Really Cost You Over Time? NADAguides.com Educates Consumers on Its Easy-to-Use 'Cost to Own' Tool
- Powerful Online Tool Analyzes Eight Key Factors to Estimate Five-Year Ownership Costs -
COSTA MESA, Calif., Nov. 19 /PRNewswire/ -- When consumers look to purchase a new vehicle, the price is usually the first thing they research before making the decision to buy. Although the Suggested Retail Price provides the consumer with the total cost for the purchase of the vehicle, one important factor is often overlooked - total cost to own. Depreciation, fees & taxes, financing, insurance, fuel, maintenance, opportunity cost and repairs must also be added in to the cost of ownership. Most often, car shoppers only consider retail price and what their monthly payment will be. While these are, of course, very important car buying decision factors, additional costs are often overlooked.
To help car shoppers, NADAguides.com has built a tool to make this cost to own research easy and provide car shoppers with a quick view of the cost of ownership for a specific car over the course of five years. The NADAguides.com Cost to Own Tool factors in the eight most important costs associated with car ownership - depreciation, fees & taxes, financing, insurance, fuel, maintenance, opportunity cost, and repairs - to give new car shoppers an accurate forecast of how much they can expect to pay and what they can really afford.
"There are many things affecting the actual cost of owning a vehicle that can be overwhelming for consumers to see the true price tag of the car they are considering," said Mike Caudill, NADAguides.com automotive expert and spokesperson. "The NADAguides.com Cost to Own Tool removes all of the guesswork. Shoppers simply select the vehicle and trim level, enter their number of years of driving experience, the number of miles they expect to drive each year and their ZIP code and what results is a detailed report of costs along with visual aids to get a clear picture. These results can even be compared against other vehicles."
After consumers input this basic information, the NADAguides Cost to Own Tool shows the overall five-year cost of ownership in addition to a complete breakdown of the cost associated with each factor for each of the five years.
To access this tool, visit www.NADAguides.com and click 'Cost to Own' on the home page or select '5-Year Ownership Costs' from the left-side menu of any new car vehicle details page.
About NADAguides.com
NADAguides.com (http://www.nadaguides.com/) is the largest publisher of vehicle pricing and information for new and used cars, classic cars, motorcycles, boats, RVs, and manufactured homes. NADAguides.com offers in-depth shopping and research tools in addition to the most market-reflective pricing available. The company also produces print guidebooks, software, web services, raw data and web syndicated products.
Reader Comments (Page 1 of 3)
Daryl Cobranchi 9:26AM (11/21/2009)
Wow! So at current energy it will only take 74 years for a Volt to pay for itself vs. the Prius? GM better hope for that $4/gallon gas spike.
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Joeviocoe 1:49PM (11/21/2009)
Um... so you want the fuel SAVINGS from choosing a Chevy Volt over the Toyota Prius to pay for the ENTIRE cost of the Chevy Volt?
Yeah... you might want to do that calculation again... this time, don't set up the scenario for a failure.
BlackbirdHighway 2:04PM (11/21/2009)
Cars never "pay for themselves". It's a false argument.
People buy cars because they have characteristics and features they want, at a price they can afford. If price was the only consideration, then every car on the road would be a Hyundai Accent, $10,665.
Some people value that the car runs on electricity, and they will pay extra for that feature. Early adopters are willing to pay a lot extra, other folks only a little, and still others won't want electric unless it casts less, and then there are some who won't want an electric at all, even when and if it is cheaper.
polo 2:10PM (11/21/2009)
@daryl
Who buys a car expecting it to "pay for itself"? Nobody. However, if people were looking at another car and they paid a few thousand more for the Volt, the cost saving would more than offset the difference.
miles 2:59PM (11/22/2009)
Lowest TCO, eh?
Can anyone beat my 2000MY 1-liter Chevy Metro? (with a car available in the US)
$8k brand new, and 44 average MPG over 185k miles.
anyone? anyone???
Joeviocoe 10:08AM (11/22/2009)
@miles
IN THE SAME CLASS!!!
It is ridiculous to compare cars based on cost unless they are about the same for everything else (speed, handling, capacity, utility, comfort, styling, etc.)
miles 3:16PM (11/22/2009)
Hi Joev
I understand your argument about same class - it's a perfectly valid point for some people. But it's not valid for all, or me. I wanted the lowest cost-of-ownership vehicle availabel in the US which satisfied these requirements:
-- fully enclosed vehicle which is heated in the winter
-- therefore not a motorcycle
No doubt the new RollsRoyce hybrid will be the best (and only) in it's class. But I don't care, as it is a complete failure regarding cost-of-ownership.
Ultimately everyone defines their own unique class of vehicle - the subset of all vehicles that best meets their requirements and is within their means. For me this means anything with 4 wheels.
What is the lowest cost-of-ownership vehicle you can get -- if you consider the class of "anything with 4 wheels" to be the only requirement?
Tohe 9:48AM (11/21/2009)
This is an interesting point and one I've been contemplating. Without going into the maintenance issues of more complex systems, I wonder about technological depreciation and how that will affect hybrids and EREVs like the Prius, the Volt and the Karma. On the bright side, BEVs have an upgrade path (by changing the batteries).
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Mike!!ekiM 10:20AM (11/21/2009)
For comparison, you should add a Camaro or Mustang V8. Higher depreciation, higher repair costs and much higher fuel costs. Also, a pickup.
- What is the monthly mileage in the Edmond's figure?
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gorr 11:23AM (11/21/2009)
It might beat the prius in number of sales in u.s.a and in cost of ownership with the subsidies but gm will not make as much money out of it as toyota with the prius because of cost to construct and research and developments costs.
Many smart folks will do like the one modifying the prius, they will do some modifications to the volt like changing the weighty 1.2 liters 4 cyls engine + weighthy generator set + weighthy battery to a high rev small gasoline or kerosene turbine electrical genset plus smaller battery. Or a bigger battery plus no ice, etc.
Developing the volt cost 5x the money then developping the prius. The prius just have a small battery plus a small electric motor and some small power electronics devises. The volt is completelly new inside out, battery-only operation, big charging system, big electric drive, big regenerative breaking system, big political problems, big administrative problems, big chassis design problems, few area to get efficient like carying a complete engine-generator combo for nothing 80% of the time, etc, etc.
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Luke 6:53PM (11/21/2009)
According to CNN, the Prius cost about $1 billion to develop. That's a bit more than the Volt's $750 million.
http://money.cnn.com/2006/02/17/news/companies/mostadmired_fortune_toyota/index.htm
http://money.cnn.com/2008/12/04/autos/bailout_hybrids/index.htm?postversion=2008120518
And, yes, I currently drive a Prius and wish I had a Volt. The Prius is an excellent vehicle, but we have to put gas in it about once a month, and that's a pain.
gorr 11:16AM (11/22/2009)
Sorry folks,
( It might beat the prius in number of sales in u.s.a and in cost of ownership with the subsidies but gm will not make as much money out of it as toyota with the prius because of cost to construct and research and developments costs.
Many smart folks will do like the one modifying the prius, they will do some modifications to the volt like changing the weighty 1.2 liters 4 cyls engine + weighthy generator set + weighthy battery to a high rev small gasoline or kerosene turbine electrical genset plus smaller battery. Or a bigger battery plus no ice, etc.
Developing the volt cost 5x the money then developping the prius. The prius just have a small battery plus a small electric motor and some small power electronics devises. The volt is completelly new inside out, battery-only operation, big charging system, big electric drive, big regenerative breaking system, big political problems, big administrative problems, big chassis design problems, few area to get efficient like carying a complete engine-generator combo for nothing 80% of the time, etc, etc )
Tony Belding 11:38AM (11/21/2009)
One problem with a cost-of-energy sticker is that the cost of electricity varies a great deal around different parts of the USA -- to a greater extent than gasoline, I mean. And of course, the price of gasoline is prone to rapid changes too. And then you can only guesstimate what percentage of driving a PHEV owner will do on electricity versus gasoline. There are so many variables, it's hard to see how a cost-of-energy rating could ever be made meaningful and kept up to date.
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joe 11:46AM (11/21/2009)
So far as I know, the only alternative fuel car that truly has a lower Total-Cost-of-Ownership is the Honda Civic GX. At list prices, $22,000 to purchase (after the $4,000 tax credit) plus $4,500 for my personal filling station in my garage ($6,500 installed minus the $2,000 tax credit). At current gasoline prices, it's about a 6-8 year payback. Most of us expect gasoline to increase in price, so the payback should turn out to be shorter. I've owned one for 2 months now and it's fine (for a car that is smaller than what I'm accustomed to). The only problem is that I miss the slurpies at the gas station.
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Tony Belding 11:51AM (11/21/2009)
It seems a lot of green technology calls for paying more now, in order to save down the road. Solar panels? Yeah.
I'd like to see this longer-term thinking take hold, but it runs against the culture here in America of recent decades. The trend has all been towards getting off cheap right now, and letting tomorrow look out for itself. Also, our economy is burdened with so much debt now, both public and private, it works against this kind of investment.
It's like buying a fountain pen. You can get a decent one for $30 as opposed to common $1 gel-ink rollerballs. However, bottled ink is so cheap you'll save money in the long run with the fountain pen. (And there is now waterproof and tamper-proof fountain pen ink available.) I'd like to see fountain pens make a comeback, but I'm not holding my breath for it to happen. The throw-away culture is pretty deeply ingrained in our society now.
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Laurens 12:08PM (11/21/2009)
Total cost of ownership studies including owner surveys are commonly held by consumer organisations. Can't imagine people are not (maybe subconsciously) aware that size is a cost factor.
That's probably also why hybrids are not a big seller in Europe. The clever money understands that investing in technology that doesn't yield that much savings hardly ever pays of, even if governments start to factor in CO2 emission costs.
Buy yourself a smaller car, that helps. Preferably a diesel!
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Steve W. 1:28AM (11/23/2009)
The last time I mentioned total cost of ownership regarding the Volt, I compared it to a Prius or a Corolla. It's not pretty. These are very reasonable comparisons, as both vehicles are quite fuel efficient. I did this on Digg. I was immediately called an effing-SUV-driving-republican.
The important consideration is that few of us have unlimited money (individually or as a country). TCO MUST be considered.
List price....: 40k
Govt rebate: 8k (borrow from the Chinese. How are we going to pay it back?)
Cost to you: 32k That's an expensive car, even if gas/electricity to run it was free.
Can we afford it?
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Matt234 9:36AM (11/24/2009)
Can we afford it? Good question. I think a lot of people can, but none of them will actually do the math, and none of them will "save" money (unless gas prices go up a lot).
But... consider this. Will the Prius get us off foreign oil? No. Does the Volt have the potential? Yes. Without "borrowing from the Chinese", would the Volt happen? Yes, but slooooowly. When is the next oil crisis going to happen? Who knows, but I sure hope I own a Volt when it does.
Check out these numbers:
http://tonto.eia.doe.gov/country/country_energy_data.cfm?fips=US
Scary, huh?
Daryl Cobranchi 2:18PM (11/21/2009)
Um... so you want the fuel SAVINGS from choosing a Chevy Volt over the Toyota Prius to pay for the ENTIRE cost of the Chevy Volt?
Yeah... you might want to do that calculation again... this time, don't set up the scenario for a failure.
Volt: $40,000
Tax credit: $7,500
Net: $32,500
Prius: $21,000
Difference: $11,500
Energy savings for Volt over Prius: $13/month
$11,500/$13 = 884 months
884 months = 73.7 years.
You're right. I shouldn't have rounded up without making note.
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Joeviocoe 2:39PM (11/21/2009)
"Energy savings for Volt over Prius: $13/month"
Based on what driving profile? Maybe if you drive more than a typical commuter each day.
$2.65 per gallon (national average right now)
1,250 miles per month (also average)
In a 2009 Prius (45 mpg combined):
27.8 gallons per month
=$73.67 per month in fuel
In a Chevy Volt (230 mpg *IF YOU USE THEIR DRIVING PROFILE)
5.43 gallons per month
=$14.40 per month in fuel (not counting electricity rates)
$73.67 - $14.40 = $59.27 in monthly fuel savings.
AND
$11,500/$59.27 = 194 months OR 16 years.
Still quite a bit for a fuel payback I agree.
***But nobody is TRADING IN THEIR NEW PRIUS FOR A VOLT***
But the Volt is still a good investment if you have a clunker or were going to buy a new car anyway.
And if you DO NOT drive over 40 miles as often as GM thinks you might, you get an even quicker payback. I will explain the problem with Cost of Ownership "standard" for vehicles with more than one energy source...