The hybrid ticking time bomb

[Isaac Zachary]

Originally Posted by Ecky

I think a hybrid is worth it, especially if it's a new car. Since they're all basically disposable anyway, better to get one with lower operating and total cost of ownership.

The funny thing is I just ran the numbers and they favor the hybrid, but are also a wash for the first 5 years.

I calculated I drove an average of 17,500 miles per year in the Avalon since I got it.

Say the Avalon gets totaled tomorrow and they hand me a check of $10,000 which becomes the downpayment.

The non-hybrid Corolla has a combined fuel mileage of 33mpg and a base MSRP of $20,425. So using an auto loan calculator, a 5 year loan would be $213 per month and at $4.5 per gallon average for the next 5 years (it's only $3.26 right now) it becomes $199 per month in fuel, or $412 total before maintenance, yearly tags and insurance.

The Hybrid Corolla has a combined fuel mileage of 52mpg and a base MSRP of $24,050. With the same $10,000 downpayment a 5 year loan would be $286 per month, but the fuel would be $126, so again $412 total per month, the same as the non-hybrid.

Of course with fuel being lower than $4.50 per gallon, I'd actually be paying more for the hybrid Corolla for the first 5 years or so.

Where'd I make it back is by keeping it more than 5 years the fuel mileage eventually catches up to the total price. Also, if I go to sell it or if it gets totaled the hybrid will be worth more.

[Ecky]

The hybrid will have a larger insurance payout and a greater retained value at the end of 5 years. Also, it's not quite apples to applies because the base hybrid (IIRC) is better equipped than the base non-hybrid.

[freebeard]

I think to sum it up is that the way people used to own cars has changed from the way I remember it,

When I was in college, a guy from my floor of the dorm, dropped the pan on his 1937 Plymouth and did the bearings -- in a parking space right on the street.

[Isaac Zachary]

But again, at the price of a Corolla, a VW Jetta looks enticing. Manual transmission and better fuel mileage than the non-hybrid Corolla. That and from what I understand VW has a better tire pressure monitoring system that doesn't have a sensor in each wheel which means I won't have to deal with the TPMS light coming on just because I changed my wheels for the winter set.

[redpoint5]

We've come full circle on this discussion. I started by pointing out there is a value sweetspot which differs by person. A brand new car is going to be most costly, and in theory, have the fewest headaches. A very old car can also be very costly because so many systems have been worn out. Poorer people can fall into this costly trap, especially when they have bad credit and must pay cash for a car.

Time is money. You might think you're saving money by spending a bunch of time wrenching on something, but maybe you're not. That time could have been looking for a better paying job, or improving job related skills, or simply working more hours at a job.

I've estimated a personal sweet-spot around 5 years old, and a person heavily involved with the industry has estimated it at 3 (lease turn in time).

In general, what age of vehicle is the value sweet-spot to you? In my view, there's no point looking at anything older than a decade because cars don't get a lot cheaper afterwards, and you still need to get some years of trouble-free use from it.

I'm one to talk though, my newest vehicle is the 2006 Acura. Thing is, it only has 115,000 mile and has been garage kept. I bought it 4 years old.

Only reason I have to get another vehicle is to get more seats for passengers. That's a "nice to have" reason, not a necessity.

Originally Posted by Isaac Zachary

But again, at the price of a Corolla, a VW Jetta looks enticing. Manual transmission and better fuel mileage than the non-hybrid Corolla. That and from what I understand VW has a better tire pressure monitoring system that doesn't have a sensor in each wheel which means I won't have to deal with the TPMS light coming on just because I changed my wheels for the winter set.

You ever own a VW? You can't even check spark plugs without removing the exhaust manifold, and to do that you need Torx tools because it would be too easy if VW just used standard hex bolts.

Only VW I'd own would be under warranty, which means I'll never own one.

[Isaac Zachary]

Originally Posted by redpoint5

I've estimated a personal sweet-spot around 5 years old, and a person heavily involved with the industry has estimated it at 3 (lease turn in time).

That's what my thinking was when I got the Avalon: a 3 to 5 year old vehicle with less than 50,000 miles on it.

Maybe other vehicles are different, but with current used car prices, a used Avalon hybrid that's 3 to 5 years old is almost as much as a brand new one. I'll have to look at other cars to see, but if 3 to 5 years is the same price as a new one, might as well as wait it out to find a new one, or until used car prices come back down, hopefully.

I've always thought that 5 years and new is good, or something under $1,000. If it's under $1,000 you know it's most likely going to have problems. But what's a killer is when you get that 10-year-old car for $5,000 to $10,000, somewhere in there, and it ends up with a costly problem.

Car payments are also time. If a person works 10 hours a day then every 10% of their income is an hour of work. If you spend 20% of your income on your vehicle then you're working 2 hours a day (more or less) so that you can own and drive a car.

[Isaac Zachary]

Originally Posted by redpoint5

You ever own a VW? You can't even check spark plugs without removing the exhaust manifold, and to do that you need Torx tools because it would be too easy if VW just used standard hex bolts.

Only VW I'd own would be under warranty, which means I'll never own one.

Not newer than 1985. Also a 1972 VW. I do have a pretty good set of Torx tips.

[redpoint5]

What did you assume for the financing rate? I just ran numbers through my spreadsheet assuming 5% interest, and the hybrid is about $2k less costly after 5 years of ownership. Did you run my spreadsheet?

With fuel at a more likely $3.50/gallon, you only save a grand on the hybrid.

That said, I've never paid more than 3% to finance a vehicle. If the rate to finance were much more, I'd probably just pay cash. Finance companies require full coverage insurance, which is much more costly. On a vehicle that is only a few grand, I'd rather carry liability only.

Originally Posted by Isaac Zachary

That's what my thinking was when I got the Avalon: a 3 to 5 year old vehicle with less than 50,000 miles on it.

Maybe other vehicles are different, but with current used car prices, a used Avalon hybrid that's 3 to 5 years old is almost as much as a brand new one. I'll have to look at other cars to see, but if 3 to 5 years is the same price as a new one, might as well as wait it out to find a new one, or until used car prices come back down, hopefully.

I've always thought that 5 years and new is good, or something under $1,000. If it's under $1,000 you know it's most likely going to have problems. But what's a killer is when you get that 10-year-old car for $5,000 to $10,000, somewhere in there, and it ends up with a costly problem.

Car payments are also time. If a person works 10 hours a day then every 10% of their income is an hour of work. If you spend 20% of your income on your vehicle then you're working 2 hours a day (more or less) so that you can own and drive a car.

You drive way more than average miles, which factors into the value equation heavily. Someone driving a hybrid 3,000 miles per year is never going to recoup the extra amount paid.

Your mileage would highly favor an EV in overall costs. If I were you, I'd wait for used prices to return to normal, then look at a '17 Chevy Bolt. Even in the worst CO winters, you should be able to get 150 miles minimum range out of it, assuming that's good enough for most of your commutes.

[JSH]

Originally Posted by Isaac Zachary

I think to sum it up is that the way people used to own cars has changed from the way I remember it, and is further exacerbated by used car prices. My parents never owned a car that was less than 10 years old, at most. One was a 1951 Plymouth (I learned to drive in), a 1973 Impala and a 1957 Chevy pickup. This was in the late 80's through early 2000's. My dad would just rebuild the engine or transmission whenever one died. Today he drives a 1984 Toyota Pickup he rebuilt the engine in.

How your parents owned cars has never been the normal way. Most people would never rebuild an engine or transmission. Sure there are some people with that knowledge but most people don't have it and have no interest in learning it.

My first vehicle was a 1987 S15 Jimmy that was purchased in 1993 with a blown rear main seal and rust holes through the body when I was 15. My father and I pulled the engine and rebuilt it before I ever started driving it. Even in my working class neighborhood that was odd.

Originally Posted by Isaac Zachary

So if the Avalon were totaled tomorrow it seems my option would be: use the insurance money to put a down payment on a new Corolla and call it a day. If not: keep driving the Avalon saving up what are my payments are now, and then when it get's too expensive to maintain, sell it and put a down payment on a Corolla. Or if used car prices come back down, maybe instead put a down payment a 3 to 5 year-old Camry or even an Avalon again with either money. The question would be if the hybrid would be worth it?

Yes, I'm selling the Prius.

The highlighted section is another reason most people don't fix high-mileage cars. The insurance replacement value is based on blue-book not what you have in a car. So you could spend $1000 to fix the A/C and $5,000 on a new engine on a Toyota Corolla with 200K miles planning to drive it another 200K miles and then get hit by a drunk and the insurance sends you a check for $3,000. (Which is what KBB says a 2005 Toyota Corolla LE with 200K miles is worth today)

Yes, a hybrid would be worth it. You would be thousands in the black on fuel savings alone by the time the hybrid battery was out of warranty.

[redpoint5]

As an aside, my parents never owned a vehicle less than a decade old, and my dad spent his vacation weeks working on them.

Instead of advancing beyond frozen food clerk, which is meant as a more entry level job to the workforce, he hoarded broken things and spent time off tinkering with them.

The job had perks for a 30+ year employee, like 5 weeks of paid vacation. He'd spend 1 of those weeks every year driving the family in a hooptie vehicle down to CA to visit family. Occasionally we'd break down, and have to replace an alternator enroute (after spending a hot afternoon in a rest area).

I'm very fortunate to have such a good father, but he never leveraged his skill potential in the labor market and distracted himself by tinkering on projects with varying levels of importance... the apple didn't fall far.