Longer road to breakeven

Thanks for the gift.

I also agree that writer of the Globe story should have named the comparable car she was matching the Prius with. I see the Boston Globe allows online comments for her story, it would be great if you would also post your analysis there.

I believe it is important not to let falsehoods about the Prius take hold in the mainstream media. The bogus CNW study should have been swatted down much harder, much faster. I'm dismayed to see some of the comments on the Globe site still citing it years after it was debunked.


Happy New Year
Prianista

 

fine lets use the matrix....using EPA figures, how long would it take to break even if driving 15,000 miles a year?? your post seems to be missing some information. my neighbor has one, works across the street from me and STRUGGLES to get half the mileage i get

**edit**

~~off topic warning~~

had to add this as well. during our recent snowy weather, i couldnt help but notice, that he as well, had to do a LOT OF DIGGING, to be able to drive his car as well, so apparently, his snow driving is not any better than mine.

 

It's often contended that Europe is a place of more efficient cars. I was looking for comparable information, but couldn't find it that easily. Comparing to a top-selling car is informative, though.

A good equivalent from a mid-range manufacturer is Ford's Mondeo. (Ford of Europe have quite good reliability ratings, and build good cars, but UK Ford dealers are generally rated badly.) The most efficient new Mondeo is the 1.8 litre diesel ECOnetic which lists at £18,645, but alloy wheels are an extra £588. The closest Prius specification is a 'T4' at £18,655 which includes alloy wheels.

The Mondeo consumes 5.3 litres of fuel per 100km on the combined cycle test, while the Prius consumes 4.3 litres. It should be a no-brainer. In addition, diesel has 10% higher energy density per unit volume, so you would hope that it would use less fuel, by volume, than an equivalent petrol car. (Diesel attracts anywhere from a 10% to 15% price premium, so they're priced about the same for equivalent energy.)

According to the data on the UK's fuel data site, there are 12 models more efficient than a Prius in terms of fuel consumed per unit distance. However, 10 of them are diesels. Factoring that in, by adding 10%, only a few of them - the newest Ford Fiesta 1.4 Diesel, the VW Polo BlueMotion, Seat Ibiza EcoMotion, Mini Cooper D, SMART fortwo coupé (one model) and the Toyota iQ - use less energy than a Prius, on the standard combined cycle test. However, the Prius is noticeably weaker on the extra-urban test than the others (e.g. the Polo manages 3.2 litres/100km on the extra-urban part, compared to the Prius 4.2). These cars are all substantially smaller than the Prius, two or three categories smaller.

As we know it isn't just about greenhouse emissions. Toxic emissions from a diesel are substantially worse: the Polo emits 237mg of carbon monoxide and 227mg of NOx, per km, on the EU standard test, while the Prius is only 180mg CO and 10mg NOx.

If the claims that have been circulated surrounding the 2010 Prius are correct, it could completely blow away everything else on the market. I hope so. Then we can stop talking about theoretically better designs and start getting everything shifted over to, at least, full hybrids.

EDIT: I should have noted that diesel costs 10-15% more in the UK. Pump prices I saw today, at one of the more expensive stations locally, were 86.9p for 95 RON petrol (this is the standard grade here), 98.9p for diesel. That's 13.8% more. However, this is because 50.35 pence is fuel duty (tax) - ultra-low-sulphur petrol and diesel now attract the same rate of duty. Fuel also attracts VAT, now at 15%. The high level of fuel duty had the contradictory effect of softening the blow of increasing crude oil prices.

 

Yes this is one of the TWO constant errors that SOTP writers make in all these faux-analyses. They take a snapshot and make the erroneous assumption that fuel prices will never change.

The second gross error of omission is that they always ignore resale costs simply because they are writers and not industry-wise analysts. Whatever the 'hybrid premium' is a good part of it will be recovered upon resale. If the vehicle is never resold and run into dust in 12-15 years then the fuel savings over that lifetime are going to be Gi-normous.

 

Again the whole concept of 'breakeven' as regards to a personal vehicle is erroneous. It's a short hand notation for a more complex analysis that writers in a column can't publish and probably are not qualified to create and comment upon.

Vehicles are depreciating assets that accumulate costs during the period of ownership. Unless they are used to generate revenue as in a business there is no breakeven point.

The only valid analysis is to total all the costs for Vehicle A (less any resale/trade ) and then compare the total to the costs for Vehicle B ( less any resale/trade ). Whichever one costs less is the better buy based purely in currency spent.

To do this one has to make some estimates upfront. This is where most writers are knowledge-deficient or too lazy or simply limited by word count.

The following costs involved have to be estimated upfront.

• Vehicle acquisiion: Purchase - Resale/Trade
• Expected miles driven annually
• Years of ownership
• Price of fuel, today, next year, over the expected ownership period
• Fuel Economy of Veh A and then Veh B
• Opportunity cost of money spent up front vs saved.

Total all these costs and see which makes the most sense based just on currency spent. Then of course Insurance, Maintenance, Repair, Fees.....less any rebates.

I've done this for the Prius and the Matrix, the hybrid and the non-hybrid siblings. It turns out that at MSRP's of $24500 and $20500 the two vehicles are roughly equivalent in total costs over 3-7 yrs. It doesn't matter much which vehicle one chooses. There's a slick bit of Marketing done here by Toyota.

After 8 yrs and 120,000 miles the Prius costs less overall.

Take the Camry and the TCH in the upper trim levels where the difference in price is less than $2000 and the TCH has a HUGE cost advantage almost immediately over its non-hybrid sibling.

 

According to the True Cost to Own at Edmunds.com the Prius will cost you more to operate over 5 years than a Matrix.

2009 Toyota Matrix = $34,645 or $0.46 per mile 2009 Toyota Matrix True Cost to Own ratings at Edmunds
2009 Toyota Prius = $38,004 or $0.51 per mile 2009 Toyota Prius True Cost to Own ratings at Edmunds

(Edmunds is pricing gas at $3.31 in 2009 rising to $3.73 by the 5th year.)

If you want to just look at fuel costs, the Matrix is EPA rated at 28 mpg combined and the Prius at 46 mpg combined.

15000 / 28 = 536 gallons
15000 / 46 = 326 gallons
That is a difference of 210 gallons per year.
A Prius cost $4,900 more than a Matrix

@ $1.50 per gallon that is $315 per year --- $4900 / 315 = 15.6 years
@ $2.50 per gallon that is $512 per year --- $4900 / 512 = 9.3 years
@ $3.50 per gallon that is $735 per year --- $4900 / 735 = 6.7 years
@ $4.50 per gallon that is $945 per year --- $4900 / 945 = 5.2 years

There are many reasons someone might want to purchase a Prius instead of a Matrix; larger rear seat, lower emissions, hybrid technology, tech features, etc. However the average driver shouldn't purchase a Prius instead of a Matrix to save money.

As to winter driving. Traction on snow is a function of tires and the skill of the driver. Unless your neighbor's Matrix is fitted with snow tires he shouldn't expect better traction that any other car with all-season tires. The Matrix is available with optional AWD but again, unless you have good tires, you just spin 4 tires instead of 2.

 

Some comments about Edmunds TCO.

First it's about the best tool out there to correctly analyze the costs. It's far more accurate than most SOTP analyses.

However, I've been in an ongoing war with them to include an inflation factor in their average fuel price estimations. They seem to have come around.
Their cost of acquisition prices are very subjective. There is no single hard and fast price all over the country. One needs to do this for themselves using Edmunds TCO as a guide to set up a spreadsheet of one's own. In the two examples that you chose they have purchase prices of the Matrix at $16900 and the prius at about $23600 before TTF. That's a $6700 difference. Too big by a third, methinks. You chose to compare a basic stripped Matrix to a Prius with more equipment. One can certainly do that but it's not apples and apples ( see below ). If one makes the two vehicles equal to start..

• alloys
• VSC
• Power windows and locks
• Cruise Control
• Z1 package

Then the MSRP of the Matrix is $20400 vs $24900 for the Prius. There is a local rebate on the Matrix. Now the two new vehicles are equal in equipment.
However if you are most interested in comparing vehicles of the same inititial acquisition price which is another valid consideration, best bang for your buck, then you should be comparing a new Matrix with a 2 y.o. Prius with less than 30000 miles on it. Both will last another 10 yrs and both cost the same to acquire upfront.

In addition in Edmunds TCO some 'costs' for all vehicles are inflated such as 'repairs' and 'maintenance'. I'd view these as worst case situations. But in fairness they apply these for all vehicles.

 

This latest calculation assumes a total write off of the value of the car upon disposal. I would think a Prius has a better resale value than a Matrix a 5 years old.

 

The whole argument behind a 'Hybrid Premium' is hypocritical, and a standard that only a hybrid is held to.

Since when did anyone expect the 'Muscle Car premium' or 'Luxo car premium' to ever pay back it's cost? That has never been an expectation of a car until the Prius.
So why is the Prius judged in that manner? It shouldn't be.
Fact is, though, it's the only car that can offer any return on it's cost. Premium or not.

 

Depends whether the regulatory authorities do what they should do, and stamp hard on the unproductive price speculation that was the cause of high oil prices. That speculation was fuelled by credit, excessive credit, same as the housing market; the exact source of the credit may change next time but a big bubble could, indeed probably will, happen again.

We were told it was due to the war in Iraq; but the taps were hardly flowing hugely from that country. Iraq sold $65bn of oil between 1996 and 2003 through the oil-for-food programme. At an average price of $40/barrel, that would be 1.6bn barrels. World consumption was 85 million barrels per day in 2007 (CIA World Factbook, estimate). On that basis Iraq was supplying less than 1% of world consumption. (The current rate of exports is 1.6 million barrels per day, 1.8% of world consumption.)

We were told it was due to increased demand from China and India; but those countries together consume less than half the amount that the US does, and China produces half of its own consumption. Further, prices continued to rise even though traffic was demonstrably falling in the US, by amounts large enough to dwarf the change attributable to the developing countries, culminating in one-day rises of $6. That was clearly not due to fluctuations in supply or demand.

I find it highly ironic that the US actually has a regulator called the Commodities Futures Trading Commission whose job, stated in law, is to control excess speculation in futures markets. They simply were not doing this job.

My belief is that we haven't found the bottom yet, because there are still plenty of leveraged positions to unravel. I think it could still drop to below $30/barrel.

We were also told that high food prices were due to corn being used to produce ethanol for fuel, and other growing land being used to grow corn for fuel. Funnily enough, the shape of the wheat futures price graph looks very much the same as that for crude oil... Yes, more price speculation, causing the actual harm that the CFTC was created to prevent.

For interesting reading, see Michael W. Masters' two testimonies to the U.S. Senate Committee on Homeland Security and Governmental Affairs:

May 20, 2008, describing the problem;
June 24, 2008, describing it further with a proposed solution.

He also appeared before the House Committee on Energy and Commerce, presenting much the same information.

 

patsports,

Not if you are talking about Edmunds.com True Cost to Own.

Edmunds estimates the Matrix will lose 56% of its value and sell for $8,027 in 5 years
They estimate the Prius will drop 54% of its value and sell for $12,029 in 5 years.

These are just guesses as no one knows what a car will be worth in 5 years just as they don't know what gasoline will cost in 5 years.



Deadphish,

Edmunds isn't perfect but at least they have a consistent formula that they use.

Yes, you could compare a new Matrix to a used Prius. Of course you could also compare a used matrix to a used Prius. If you do that, the difference in price is even greater. Or you could compare a used Matrix to a new Prius. Your could even compare a $12K Nissan Versa to a $22,000 Toyota Prius since they are both EPA rated as mid-size cars. I prefer a more apples to apples approach. New to New, Used to Used, etc.

As to your option packages. You could add those, the difference in price decreases from $4900 to $4500. I'm not sure about the alloy wheels. The steels wheels on the Matrix cost less but it helps offset the fact that the Prius is not available with a telescoping wheel and height adjustable seat while both are standard on even the base Matrix.

Of course different people find different things important. To me the larger rear seats in the Prius are useless. In 2 years we have taken passengers ~ 5 times. I would much prefer the greater cargo space in the Matrix and longer load floor. Those with teenage kid might prefer the greater rear leg room in the Prius.

 

The "Muscle Car Premium" has paid off quite well for 60's cars if you compare the "muscle cars" to their standard base models. We won't know if current muscle cars will pay off for some time.

Hybrids don't have to pay back if you are buying a hybrid to drive a hybrid or because you like the styling of the Prius. However, if you are buying a hybrid because you have a long commute and hope to save money by doubling your mileage, then the extra initial cost does matter. The reason that people expect to "break even" on a hybrid is because they are marketed based on fuel savings.

 

And similarly I prefer an apples-apples approach of comparing two vehicles that are equivalent in initial acquisition cost. You prefer to give up features and I prefer to give up miles.

Again certain features, you prefer telescoping SW and adjustable seats but are willing to pass on cruise ctrl, power windows/locks and SKS. I am not. I'll give up the miles to get these.

This is why comparing dissimilar vehicles leads in circles.

 

Actually, new vehicles aren't even a consideration for me. I buy 2-5 year old vehicles and drive them for 200K miles. I saved $5K on my Prius by letting someone else drive the first 22K miles.

 

And Mr Jhinton, I'm with you although when I bought my used Prius I initially was going to buy my first ever new car. I went looking at Corollas as I know a Prius was out of my reach but I found 3 used Prius, all had about 60,000km on them and all around the price of a new Corolla out the door. I ummed and arred and test drove 2 Prius, the other was too scratched and too black. (black is bad in Adelaide heat) and soon enough I was trading one yard against the other until I got a price I wanted to pay.
So for me there was no Hybrid Premium, I paid the same for a Prius as I would have pair for a Corolla. This is then an apples for apples comparison for me, a $25,000 new Corolla or a $25,000 3 year old Prius. The Prius won easy. See it all depends on what an apple is to you. I don't think I'm alone being a person who shops for a car with a price in mind, what ever can become mine for that price to me is an apple for comparing.

 

I bought the Prius because I was interested in it specifically, price aside. But I did compare it to a new Matrix just to have an idea of how much it cost relative to what for me would have been an alternative choice, and found that the Prius was cheaper over my anticipated long period of ownership. Since 2004 the Matrix has become a better value as safety features have migrated into the model line.

So I'm in Jhinton's camp too; the Matrix (and particularly the used Matrix) is a smart car to consider as a Prius alternative.

 

The key here is, "Mainstream Media". Think of which group hates the "Mainstream Media", and you can start to see where quoting stories like this causes irony, because we can't trust the mainstrean media can we???wink wink?

 

Agreed -

One day I should actually crunch the numbers and post the results, if any one wants to try - here's a good ballpark set of figures.

(I bet a new 2008 Hemi Challenger purchase now would be a good muscle car payback in ten or twenty years when chrysler is all but a chapter in a great American history book???)

Purchased 2005 Prius in August 2005.

106,000 miles in 40 months of ownership.

averages to 2,650 miles per month.

Gas WAS about $2 a gallon in august 2005.

Gas hit about $4.65 a gallon mid 2008. (here in southern kelly-fornia)

freeway driving mostly to blame, average fuel mileage 48 to 52 mpg continously. Right now I am down to 45 average due to colder temps overall.

If one truly wanted to figure the cost of ownership versus payback, add downpayment to every monthly car payment totaled (includes interest on auto loan) add the cost of insuring the prius and you start to have this runaway effect in operating cost versus breakeven. Stop driving the car, and or sell it - versus driving it after you own it changes all the dynamics of the true cost. To know the breakeven point only comes when you stop driving or owning a prius, then you can tally the cost of ownership over the time of ownership. Lucky for me, I still drive 2,650 miles a month and gas is now $1.59 ish. I still have some car payments, and gas is slowly starting to climb again. Happy New Year.

Add in the value of those stupid little yellow stickers and you can say that time is money, so how do we add this into the calculations. I bought the car the week Schwarzenneggfart signed the carpool sticker law.

My motivation to buy the prius was time savings in the carpool lane and fuel savings at the pump. If buying a Prius saves the whales, then I'm OK with that. Even a Prius driven at 2,650 miles a month pollutes the environment, I'm ok with that too. When the carpool stickers become void?, I'll be miffed.

I don't know why the prius is judged that way, but I would bet that the same folks who do not trust the mainstream media, are the same ones trying to rationalize breaking even or even making money on a car purchase. I can only say that my 2005 prius is still offering returns at my current operating cost. I have a 2000 V6 Camry in the garage with 177K miles, it drives sweet, looks good and lives in the garage. No disposal calculations yet for my two yotas. I hope to keep my Prius for a long - long time.:focus: