As seen on the web at CNNMoney.com.
11 mileage-obsessed questions
It’s never been easy to buy a car, but with soaring gas prices, you may have a lot more to ask about what’s best for you. Here are the answers.
By Mike Allen, Money Magazine contributing writer
August 12 2008: 6:04 AM ET
1. Following convention
Question: How do I get a deal on a conventional car with decent fuel economy?
Answer: First consult fueleconomy.gov to narrow your list of potential cars based on mileage; then check Kelley Blue Book’s “New Car Blue Book Value,” the price these autos are really selling for now.
Stick with vehicles going for less than sticker, generally those in the 30-mpg-and-under range. Pick three and check them on CarsDirect, which allows you to select specific trim and options, then see an offer price from a local dealer.
Next e-mail Internet managers at up to eight local dealers, telling them about that quote and asking if they can beat it. (These people usually cut to the chase fast.) Go for a second round with your new low. Ideally you’ll end up under Blue Book Value.
2. Used value
Q. What about buying used?
A. It depends. “Used compact cars in really good shape – like three-year-old Honda Civics – are commanding 70% to 90% of their original MSRP because demand is so high,” says Joe Phillippi, president of AutoTrends Consulting.
Adds John Wolkonowicz, senior automotive analyst for Global Insight: “Buying a used Camry or Accord isn’t a great move – they hold value too well.”
Your best deal: a car that isn’t in great demand but gets good reliability ratings from J.D. Power & Associates, such as a 2005 Ford Focus (24 mpg city, 33 mpg highway) or Hyundai Elantra (25 mpg, 33 mpg).
Both sell for less than 60% of the manufacturer’s suggested retail price (MSRP), which seems an underestimation of their real value, considering their J.D. Power ratings.
3. Function over form
Q. Forget about style. I want the most fuel-efficient conventional car money can buy. Which one should I go for?
A. Don’t mind running errands in a glorified golf cart? The Smart ForTwo coupe ($12,235) gets 41 mpg on the highway, 31 in the city.
A roomier option: the Toyota Yaris ($13,110), which gets 36 mpg and 29 mpg.
4. Hybrid hustle
Q. I really want a hybrid. Any advice?
A. Dealers have waiting lists for the two most popular, the Prius and the Civic Hybrid. So if you want one of these, start with the largest dealer in your area, as it gets the most inventory. Be flexible about trim, color and options; you’re in no position to be picky.
Still, you’ll likely have to put your name on a waiting list; expect to pony up a refundable deposit of $1,000 or so. (As of now you’ll also pay about $1,000 above sticker on the Prius, according to Kelley Blue Book.) If the delivery time is longer than you’d like, look beyond your area.
“Hybrids are most popular in coastal states and Texas,” says Jack Nerad, an analyst at Kelley Blue Book and author of “The Complete Idiot’s Guide to Hybrid and Alternative Fuel Vehicles.” “Your best chance of finding one is in the Midwest.” (Of course, you’ll have to pay to get the car to you, which can add up to $1,000 to your bill.)
You’ll have an easier time getting a hybrid with less cachet and fewer miles per gallon, such as the Chevy Malibu (24 mpg city, 32 highway) or the Nissan Altima hybrid (35 mpg, 33 mpg).
5. Gizmo gambler
Q. I’ve seen gadgets that promise to improve my fuel economy. Do they work?
A. The U.S. Environmental Protection Agency has tested hundreds of these gizmos. Some have you add liquids or pills to the tank; others have you add an underhood magnet or a vortex generator in the air-intake system.
So far the EPA has found none that delivers significant savings; some can even damage your engine. The only devices that stand a chance of improving your miles per gallon are those that modify not the car but your driving habits.
Consider a real-time fuel-economy reader – such as the Kiwi ($299) – which installs easily on your dash and includes lessons to help you accelerate less aggressively and otherwise drive in a way that reduces your mileage.
6. Dump your gas guzzler…
Q. Help! I want to get rid of my SUV.
A. With thousands of dollars in rebates lying on the hoods of new SUVs, it’s hard to get a good price selling a used one. “You could get 45% on a three-year-old Toyota Sequoia two years ago, but now it’s worth 30%,” says Spinella.
Before you sell, check the “Is It Worth Trading in Your Gas Guzzler?” calculator at Edmunds.com. Depending on the answer, you may want to sit on your ute at least until fall, when four-wheel-drive vehicles will be in greater demand and pump shock may have ebbed.
If you must sell, do it on your own rather than trade it in. Dealers don’t need another SUV collecting dust on their lot. So if they agree to take yours, they’ll pay you well under market.
More than half of used-car buyers shop online, reports J.D. Power, so post your ad on sites like AutoTrader.com or Cars.com. To sell fast, advertise it for a few hundred less than the lowest listing.
7. …or buy a new one.
Q. But now is a good time to buy an SUV or a crossover, right?
A. Yep, if sticker price is your primary concern. You might knock as much as 15% off the MSRP, says Spinella.
Plus, you have your choice of sweet financing (like 0% for 72 months on a Chevy Suburban) or hefty rebates (an average of $5,097, according to Edmunds.com, and as much as $7,000 on a Hummer H3).
Figure out which is the better bet by using the “Cash Back vs. Low Interest” calculator at Cars.com.
8. Low low interest rates!
Q. What kind of financing can I expect today?
A. “Going through the dealer is usually the best move these days,” says Spinella. “Banks have to make money on their loans, but dealers don’t really rely on financing for income.”
If you’re shopping now, you’ll hit model year-end clearances, so you should be able to get a rate of 0% to 2.9% on something the manufacturer is trying to get rid of (read: SUVs). Aim for 4.9% or less on anything else, says Caldwell.
9. Diesel dilemma
Q. What about the new diesel?
A. Popular in Europe, diesel is 20% to 40% more efficient than gas. And now a diesel car won’t make your garage smell like a truck stop: The fuel itself contains far less sulfur than it once did. Plus, diesel cars today have more efficient engines, and most 2009s will pass the same emissions standards as gas vehicles.
The compliant 2009 Volkswagen Jetta diesel – which gets 41 mpg on the highway – went on sale in August; Audi, Honda and Mercedes-Benz will follow with models in the next few months.
But experts predict that the U .S. will be slow to adopt these vehicles: Diesel is sometimes pricier than gas here, reducing or even negating potential savings. (In August 2007 diesel cost about the same as gas; recently it was $4.71 when gas was $3.93.) In the Northeast and Midwest, where houses are heated with oil similar to diesel, the cost goes up in winter.
Also, you’ll pay a minimum $1,000 premium on these cars. To see if diesel would make sense for you, use the “Side-by-Side Comparison” tool at fueleconomy.gov, entering in local gas and diesel prices.
10. Plugging in
Q. What is this new kind of hybrid I’ve heard of?
A. You are probably talking about plug-in hybrid electric vehicles, or PHEVs. Like pure electric cars, these can be recharged via a wall socket. Unlike pure electric cars, PHEVs also have a gas engine that starts as needed to either move the car or recharge the battery, so you won’t be stuck as you are when your cell phone dies.
The fuel economics of PHEVs exceed those of the current crop of hybrids. They can run up to 40 miles on battery alone, and the cost per mile can be about a tenth that of a gas-powered car. Toyota is hoping to have its Prius PHEV to market by 2010, and GM plans to sell its Volt PHEV by then too.
The big question will be cost; the battery is quite expensive so far. “We’re talking thousands of dollars,” says Kelley Blue Book’s Nerad. “The payback period could be very lengthy.” The popularity of PHEVs will depend to a large degree on how big a tax credit the government offers.
11. Doing the math
Q. How fast does a hybrid pay off?
A. So you’re thinking about bypassing a standard Camry in favor of a Prius (if you can find the darn thing). Wondering how long it’ll take before your savings at the pump compensate for the higher price?
The answer depends on where gas prices go. At today’s $3.93 a gallon, it’d take almost five years to recoup the $4,913 difference and start saving money. (By the way, that Prius has an MSRP of $23,535, but good luck getting it; we’ve noted what it’s actually selling for.)
Now, if you got a hybrid on which there are still tax credits, the payback could be a few months shorter. Still, you’re paying a lot up front for delayed gratification, especially considering that a 2008 Camry and Prius are expected to retain virtually the same percentage of value on resale by 2013 – 39% and 38%, respectively – according to Kelley Blue Book.
- Additional reporting by O.C. Ugwu and Andrew Nusca
11 mileage-obsessed questions
As seen on the web at CNNMoney.com.
11 mileage-obsessed questions
It’s never been easy to buy a car, but with soaring gas prices, you may have a lot more to ask about what’s best for you. Here are the answers.
By Mike Allen, Money Magazine contributing writer
August 12 2008: 6:04 AM ET
1. Following convention
Question: How do I get a deal on a conventional car with decent fuel economy?
Answer: First consult fueleconomy.gov to narrow your list of potential cars based on mileage; then check Kelley Blue Book’s “New Car Blue Book Value,” the price these autos are really selling for now.
Stick with vehicles going for less than sticker, generally those in the 30-mpg-and-under range. Pick three and check them on CarsDirect, which allows you to select specific trim and options, then see an offer price from a local dealer.
Next e-mail Internet managers at up to eight local dealers, telling them about that quote and asking if they can beat it. (These people usually cut to the chase fast.) Go for a second round with your new low. Ideally you’ll end up under Blue Book Value.
2. Used value
Q. What about buying used?
A. It depends. “Used compact cars in really good shape – like three-year-old Honda Civics – are commanding 70% to 90% of their original MSRP because demand is so high,” says Joe Phillippi, president of AutoTrends Consulting.
Adds John Wolkonowicz, senior automotive analyst for Global Insight: “Buying a used Camry or Accord isn’t a great move – they hold value too well.”
Your best deal: a car that isn’t in great demand but gets good reliability ratings from J.D. Power & Associates, such as a 2005 Ford Focus (24 mpg city, 33 mpg highway) or Hyundai Elantra (25 mpg, 33 mpg).
Both sell for less than 60% of the manufacturer’s suggested retail price (MSRP), which seems an underestimation of their real value, considering their J.D. Power ratings.
3. Function over form
Q. Forget about style. I want the most fuel-efficient conventional car money can buy. Which one should I go for?
A. Don’t mind running errands in a glorified golf cart? The Smart ForTwo coupe ($12,235) gets 41 mpg on the highway, 31 in the city.
A roomier option: the Toyota Yaris ($13,110), which gets 36 mpg and 29 mpg.
4. Hybrid hustle
Q. I really want a hybrid. Any advice?
A. Dealers have waiting lists for the two most popular, the Prius and the Civic Hybrid. So if you want one of these, start with the largest dealer in your area, as it gets the most inventory. Be flexible about trim, color and options; you’re in no position to be picky.
Still, you’ll likely have to put your name on a waiting list; expect to pony up a refundable deposit of $1,000 or so. (As of now you’ll also pay about $1,000 above sticker on the Prius, according to Kelley Blue Book.) If the delivery time is longer than you’d like, look beyond your area.
“Hybrids are most popular in coastal states and Texas,” says Jack Nerad, an analyst at Kelley Blue Book and author of “The Complete Idiot’s Guide to Hybrid and Alternative Fuel Vehicles.” “Your best chance of finding one is in the Midwest.” (Of course, you’ll have to pay to get the car to you, which can add up to $1,000 to your bill.)
You’ll have an easier time getting a hybrid with less cachet and fewer miles per gallon, such as the Chevy Malibu (24 mpg city, 32 highway) or the Nissan Altima hybrid (35 mpg, 33 mpg).
5. Gizmo gambler
Q. I’ve seen gadgets that promise to improve my fuel economy. Do they work?
A. The U.S. Environmental Protection Agency has tested hundreds of these gizmos. Some have you add liquids or pills to the tank; others have you add an underhood magnet or a vortex generator in the air-intake system.
So far the EPA has found none that delivers significant savings; some can even damage your engine. The only devices that stand a chance of improving your miles per gallon are those that modify not the car but your driving habits.
Consider a real-time fuel-economy reader – such as the Kiwi ($299) – which installs easily on your dash and includes lessons to help you accelerate less aggressively and otherwise drive in a way that reduces your mileage.
6. Dump your gas guzzler…
Q. Help! I want to get rid of my SUV.
A. With thousands of dollars in rebates lying on the hoods of new SUVs, it’s hard to get a good price selling a used one. “You could get 45% on a three-year-old Toyota Sequoia two years ago, but now it’s worth 30%,” says Spinella.
Before you sell, check the “Is It Worth Trading in Your Gas Guzzler?” calculator at Edmunds.com. Depending on the answer, you may want to sit on your ute at least until fall, when four-wheel-drive vehicles will be in greater demand and pump shock may have ebbed.
If you must sell, do it on your own rather than trade it in. Dealers don’t need another SUV collecting dust on their lot. So if they agree to take yours, they’ll pay you well under market.
More than half of used-car buyers shop online, reports J.D. Power, so post your ad on sites like AutoTrader.com or Cars.com. To sell fast, advertise it for a few hundred less than the lowest listing.
7. …or buy a new one.
Q. But now is a good time to buy an SUV or a crossover, right?
A. Yep, if sticker price is your primary concern. You might knock as much as 15% off the MSRP, says Spinella.
Plus, you have your choice of sweet financing (like 0% for 72 months on a Chevy Suburban) or hefty rebates (an average of $5,097, according to Edmunds.com, and as much as $7,000 on a Hummer H3).
Figure out which is the better bet by using the “Cash Back vs. Low Interest” calculator at Cars.com.
8. Low low interest rates!
Q. What kind of financing can I expect today?
A. “Going through the dealer is usually the best move these days,” says Spinella. “Banks have to make money on their loans, but dealers don’t really rely on financing for income.”
If you’re shopping now, you’ll hit model year-end clearances, so you should be able to get a rate of 0% to 2.9% on something the manufacturer is trying to get rid of (read: SUVs). Aim for 4.9% or less on anything else, says Caldwell.
9. Diesel dilemma
Q. What about the new diesel?
A. Popular in Europe, diesel is 20% to 40% more efficient than gas. And now a diesel car won’t make your garage smell like a truck stop: The fuel itself contains far less sulfur than it once did. Plus, diesel cars today have more efficient engines, and most 2009s will pass the same emissions standards as gas vehicles.
The compliant 2009 Volkswagen Jetta diesel – which gets 41 mpg on the highway – went on sale in August; Audi, Honda and Mercedes-Benz will follow with models in the next few months.
But experts predict that the U .S. will be slow to adopt these vehicles: Diesel is sometimes pricier than gas here, reducing or even negating potential savings. (In August 2007 diesel cost about the same as gas; recently it was $4.71 when gas was $3.93.) In the Northeast and Midwest, where houses are heated with oil similar to diesel, the cost goes up in winter.
Also, you’ll pay a minimum $1,000 premium on these cars. To see if diesel would make sense for you, use the “Side-by-Side Comparison” tool at fueleconomy.gov, entering in local gas and diesel prices.
10. Plugging in
Q. What is this new kind of hybrid I’ve heard of?
A. You are probably talking about plug-in hybrid electric vehicles, or PHEVs. Like pure electric cars, these can be recharged via a wall socket. Unlike pure electric cars, PHEVs also have a gas engine that starts as needed to either move the car or recharge the battery, so you won’t be stuck as you are when your cell phone dies.
The fuel economics of PHEVs exceed those of the current crop of hybrids. They can run up to 40 miles on battery alone, and the cost per mile can be about a tenth that of a gas-powered car. Toyota is hoping to have its Prius PHEV to market by 2010, and GM plans to sell its Volt PHEV by then too.
The big question will be cost; the battery is quite expensive so far. “We’re talking thousands of dollars,” says Kelley Blue Book’s Nerad. “The payback period could be very lengthy.” The popularity of PHEVs will depend to a large degree on how big a tax credit the government offers.
11. Doing the math
Q. How fast does a hybrid pay off?
A. So you’re thinking about bypassing a standard Camry in favor of a Prius (if you can find the darn thing). Wondering how long it’ll take before your savings at the pump compensate for the higher price?
The answer depends on where gas prices go. At today’s $3.93 a gallon, it’d take almost five years to recoup the $4,913 difference and start saving money. (By the way, that Prius has an MSRP of $23,535, but good luck getting it; we’ve noted what it’s actually selling for.)
Now, if you got a hybrid on which there are still tax credits, the payback could be a few months shorter. Still, you’re paying a lot up front for delayed gratification, especially considering that a 2008 Camry and Prius are expected to retain virtually the same percentage of value on resale by 2013 – 39% and 38%, respectively – according to Kelley Blue Book.
- Additional reporting by O.C. Ugwu and Andrew Nusca