Is a Prius a Good Value?

That was actually entertaining with a little humor. Only Edmonds was the nay-sayer!

 

<div class='quotetop'>QUOTE(Prianista @ Jan 21 2007, 09:17 PM) [snapback]378867[/snapback]</div>

I don't agree with the Intellichoice analysis in that it values depreciation (the retention of value for purposes of resale) too heavily.

The depreciation figures are historical. There has been a general shortage of these cars over the past couple of years with the result that any resales were at close to original retail price. As we currently see, the shortage is ebbing now and the cars are starting to sell at comparable prices to other vehicles. Consequently, I would expect these cars to depreciate at "normal" rates over their full life. Yes - I think they will do better than other cars, but the difference will be small enough that I would not make my purchase decision based on that.

Given the above, the cars financially break even compared to other cars - And that's with taking the tax credit into account. Where the car really differentiates itself is:

1- Access to the car pool lane (time is money after all)

2- A contribution to the environment and reduction on the dependence on foreign oil (What I call the feel good effect - no direct financial benefit)

3- A great feeling at the gas pump, when you pay a small amount for fuel. In essence, you paid for this fuel up front as part of the purchase of the car... but then, thereafter you get a feeling of freedom to go anywhere at a minimal cost (another feel good effect). Note: This feel good effect has an undesirable consequence in that you tend to drive more miles than you otherwise would (bad for the environment).

You will notice that the reporter in the videoclip.... mentioned #1 and #3 above in his expression. And I think he is absolutely right.

At this time the tax credit is being phased out... but at the same time, the prices on the cars are coming down. So, I would say those two effects generally cancel each other out.

The problem is the car pool lane sticker - with that going away, part of the value proposition is disappearing and I am not sure what can be done about it. I am glad I got mine... but that really does not solve keeping the enthusiasm for the car going. And we can't just keep giving away car pool lane stickers.

I have thought that the stickers should have a rollover provision. For example, each car would only be entitled to 3 years with a sticker. When the car gets to be 3 years old, its sticker would expire. Newer cars would then get stickers without increasing the overall number of cars eligible for the car pool lane. It's just an idea.

John.

 

<div class='quotetop'>QUOTE(John in LB @ Jan 22 2007, 04:40 AM) [snapback]378901[/snapback]</div>

I second that analysis. Looking at Washington Post want ads and Kelley Blue Book, depreciation on a higher-mileage used Prius looks about the same as depreciation on an Toyota. But I still believe the Prius is a modest money-saver from the fuel costs alone, compared to (e.g.) Camry, Taurus, or similar.

 

<div class='quotetop'>QUOTE(chogan @ Jan 22 2007, 07:40 AM) [snapback]378931[/snapback]</div>

Using the depreciation to calculate worthwhileness values is a bit reaching. With that logic, the EV's would have the greatest value considering how much they have appreciated. But that's solely a function of the fact that there is no supply.

 

<div class='quotetop'>QUOTE(burritos @ Jan 22 2007, 10:40 AM) [snapback]378992[/snapback]</div>

But it's nice to see the situation turn around like that. Last year about this time, Consumer Reports came out with their cover article stating that all hybrids were money-losers. Later they amended that due to a double-charging error, so that the Prius and HCH came out mildly ahead and others still lost money over 5 years of ownership. At that time they were factoring in heavy depreciation rates an all hybrids, which flew in the face of the evidence at that time, and still seem overdone (were they worried about batteries needing replacing?). Also, they considered gas prices at $2/gal for 3 years, then $3/gal in 2009 and $4/gal in 2010 (altho in the text they only mentioned gas prices of $3 and $4/gal).

So if you consider normal depreciation and gas prices of $2.50/gal for a couple years, then $3/gal and up for the remaining 3 years, I can see a Prius owner would definitely come out ahead, compared to an owner of a similarly-sized and equipped mid-sized car.

Still, people don't buy new cars for the sole reason of best price. If that were the case, you'd buy a reliable 3 or 4-year old car and keep it for 5 years or so. That's a heck of a lot cheaper overall. If there's enough used Prii hitting the market in the years ahead, that may be a good option for many.

 

A PZEV minimizes emissions and no smog checks in California. Batteries guaranteed for 150k miles or 10 years. Fewer moving parts (i.e., no starter) to go wrong. Toyota engineers put a lot of thought into every component. Vehicle does not idle when stopped. Maintenance interval at 5k miles (ICE only runs one-half of the time).

Let's see, conventional vehicles have higher emissions and need regular smog checks. Batteries last at most 6 years. More moving parts to go wrong. Detroit appears to design every vehicle independently (while Toyota has parts common to its entire fleet, i.e., cruise control). Vehicle ICEs run constantly whether they are needed or not. Even at 5k maintenance intervals, Detroit vehicles have more wear and tear.

It's not just fuel economy, but the whole package and long-term thinking.

 

I personally bought my hybrid to decrease the amount of my money being given to oil companies! With the amounts of their recent profits, the American people are being robbed!! I would rather buy a Prius and give the money to Toyota to help them come up with new technology than to have more money go to the oil companies.

 

Very interesting. They start by questioning whether hybrid owners are really saving money (like that's the only reason to buy one), as the reporter drives by - I couldn't really tell, what with all the haze and smog ... :huh:

It was a bit more balanced, though, stating that "saving money" is probably not the best reason to buy a hybrid; that is, there are other reasons, too! What a revelation.

 

<div class='quotetop'>QUOTE(chriswessner @ Jan 22 2007, 04:10 PM) [snapback]379226[/snapback]</div>

I don't want this topic to go off track, however, just a quick reply to your statement. When you give the money to Toyota, it goes to Japan and the people over there. When you give the money to Chevron and Exxon (as an example) - the money stays here in the USA.

So, which is better? Just a thought....

 

<div class='quotetop'>QUOTE(Tideland Prius @ Jan 22 2007, 12:38 PM) [snapback]379132[/snapback]</div>

Let me start off by saying that I fully agree that a Prius has many benefits, some directly tied to money, others being indirect. For whatever reasons, all of us bought the car and a significant majority really enjoy it and have absolutely no regrets.

Where most people make a mistake in evaluating the economic benefits of the Hybrid technology is comparing it to some other car which has low MPG (such as a pick up truck). In that respect, this artificially accentuates the value of the Prius.

Having said that, if you want to do a direct economic analysis - you have to compare identical products - not a switched product - to measure the incremental benefits. I did a detailed analysis in 2005. At that time, I wanted to measure the value of the hybrid technology.

The best way for me to do that analysis was to compare a Honda Civic - the hybrid model versus the normal model. I selected that vehicle, not because it was the best or worst - but because it was exactly the same vehicle with the only difference being the drive train. Even when considering the drive train, the combined power of the motor/engine in the hybrid provide approximately the same performance as the normal civic. The analysis was made easy by the fact that the hybrid components were warranted for 10 years / 100,000 miles. Therefore, I assumed no additional maintenance costs associated with the electrical part. I further assumed the same repair costs for the engine side of both cars.

I assumed a lifespan of 120,000 miles. I varied miles per year between 10,000 and 25,000. My findings were that the Hybrid never paid off - It was close - less than $1000 in NPV difference - but the regular drive train was cheaper in total cost of ownership.

One of the reasons for this is that the regular civic already gets pretty good mileage - and the incremental gas savings did not make up for the extra purchase price. The analysis took into account tax credits as well as higher sales and licensing fees.

 

<div class='quotetop'>QUOTE(efusco @ Jan 22 2007, 11:30 PM) [snapback]379415[/snapback]</div>

I know you did not mean that exactly... But I understand what you are saying.

It is a bit humorous, but here is another item from another thread that has just come out.... The following is an excerpt from that thread:


Toyota has announced the MPG ratings on their all-new Tundra,"the biggest, bad-nice person truck on the planet!" In the words of Jim Press. Looks like someone lost the memo on being green when they engineered this one!

Toyota Tundra Crewmaxx(4X4): 14 in the city and 18 on the highway configured like most full-size crew cabs with the 5.7 V8.

For comparison the Chevy Silverado Crew Cab(4X4) is rated at 16 in the city and 20 on the highway.

I told you toyota missed it big time on the new Tundra!

Also Chevy's Silverado advertising made Toyota scrap their Tundra campaign.

 

<div class='quotetop'>QUOTE(Tideland Prius @ Jan 23 2007, 09:11 PM) [snapback]379899[/snapback]</div>

The Prius is an excellent car in many respects, and your evaluation is correct from a value tradeoff point of view.

My analysis is a little different than yours. I was trying to strictly compare the value of the hybrid technology and my findings are that the technology does not pay off (if you are only considering economics).

 

<div class='quotetop'>QUOTE(chriswessner @ Jan 22 2007, 07:10 PM) [snapback]379226[/snapback]</div>

Amen to that! I think this is a great motivating factor to get people to purchase hybrids. The environomental/global warming argument is only going to appeal to so many people.

 

<div class='quotetop'>QUOTE(John in LB @ Jan 23 2007, 02:02 AM) [snapback]379410[/snapback]</div>

Toyota seems to be leaving some of the money here, I have friends and relatives in Indiana who were damn glad to see that plant open there.

When you give the money to Chevron and Exxon, you are helping Saudi Arabia fund terrorism and maintain one of the most repressive governments on the planet. They cut your head off if you think about letting your wife drive your car, for example. I exaggerate, but only a little.

 

<div class='quotetop'>QUOTE(John in LB @ Jan 23 2007, 02:02 AM) [snapback]379410[/snapback]</div>

Don't forget that Camry hybrids are build (assemble) in the US by US workers also.