Sunday, January 15, 2006
Now suppose I get really fancy and want a vehicle from a respected manufacturer in order to avoid rapid depreciation. That moves my thinking to something like a Toyota Corolla. That vehicle starts at $14,000, but to get to the model that has
- anti-lock brakes
- curtain airbags (which I've valued highly since I saw them save a co-worker's life)
- less hideous styling
- and vehicle stability control (which the Insurance Institute for Highway Safety says reduces fatal crashes by better than 33%)
$1300 / gasPrice * (1 / (1/CorollaMPG - 1/PriusMPG)) = miles
I think that's a reasonable time to ROI. Moreover, we like the Prius as a vehicle a bunch more.
OK, but suppose that I live in a snowy place where winter drags on. I still feel good about the Prius because it seems to handle really well on slick surfaces. When we test drove a Prius, I took it to the local high school's icy parking lot and attempted to put the vehicle into a spin or otherwise lose control. Without endangering the vehicle, I couldn't. I say I couldn't without hyperbole. After we returned the car, I took my current front wheel drive sedan back to the parking lot to get a quick comparison. It, and I, fared much worse; our car's traction was so poor my wife asked me to stop soon after starting to play, er, experiment. Honestly the Prius seemed more stable on slick stuff than Subarus I've ridden in.
So let me go back and revisit one assumption: suppose I was willing to stick with a Kia. At that rate, I'd want to at least look at the Rio 5, which, with the addition of a hatchback, appears more similar in space to the Prius. Decked out with almost every feature that I listed as important beside VSC, the Rio 5 is $16,000, a solid 5 kilobucks cheaper. To make up that difference you'd have to drive the Prius about 175,000 miles. Honestly, I'm expecting the Prius to last that long without need of significant repairs. However, I think the decision at this point has really come down to the quality of the vehicle and I think I'm going to spring for the nicer. Why? Well, for example, the Prius has
- A better crash rating
- A much nicer climate control system
- The highest possible expected reliability rating from Consumer Reports for the 2005 Prius, of which the '06 is essentially a bug fix release.
- A lower cost to insure because the IIHS finds it pays two thirds as much for injuries and three quarters as much for collisions for Priuses than it does for the "average car."
I think my final reason for picking the Prius over anything else is the fat check from the government. Naively assume that all vehicles evenly depreciate 2 kilobucks per year. If the federal government writes you a check for 3 kilobucks, they're covering the cost of 1.5 years' depreciation. If you trade in after 3 years, you're further ahead on that curve than you would be with any other vehicle. Now dropping a naive assumption: vehicles don't depreciate evenly; however, the Prius has held its value pretty well. I have a friend who bought an '02 Prius for, I'm guessing, around $22K. It's now privately salable for about $16K according to Blue Book. He lost $6K in 4 years, which beats my naive depreciation curve. I'll speculate that Priuses (my Latin teacher wife points out that the proper plural of the Latin word prius is priora) will continue to be well-demanded items because I'm pessimistic about the future price of gas, which seems to have a direct correlation to the demand for such vehicles.
Feel free to point out flaws in my logic or better transportation options that I missed. I've still got a few days before I'll make an irreversible decision.
And though I have been through this logic with you numerous times before, I appreciate seeing it all laid out in an organized fashion, math equations and all. Thanks for not going out and buying the first spiffy Hummer you fall in love with.
But I think you notice something else important, which is the that monetary value is not the only value to consider when buying a car. There is also the safety value, the aesthetic value, the convenience value, and (although you didn't explicitly mention it) the environmental value. It sounds like based on your weighing each of these, the Prius wins.