Don’t leap into buying new car just to save gas | courier-journal | The Courier-Journal

Don’t leap into buying new car just to save gas | courier-journal | The Courier-Journal

WASHINGTON — On television recently, I watched as a motorist said that all he could do about soaring gas prices was to close his eyes and pump.

There are actually some things you can do to reduce your costs — and fuel consumption — such as driving slower. But Consumer Reports has released a warning about one gas-saving tactic that might end up costing you more.

If you’re thinking of trading in your gas-guzzler for a more fuel-efficient ride, do the math. The savings you’re hoping for at the pump might be negated by the price you pay to get rid of your car.

The high cost of gas is changing the way some people are shopping for a car, according to a survey of Michigan AAA members. They said gas mileage was their No. 1 criteria in choosing their next car. Next came make and model, safety features, performance, seating capacity and technology features.

“While we support the downsizing trend in principle,” said Jeff Bartlett, auto deputy editor at ConsumerReports.org, “we caution consumers to look at their long-term owner costs and not rush to make a change they may later regret.”

Here’s the problem — at least in the short-term — with trading in your car for one that’s more fuel-efficient. You have to take into consideration several factors, including depreciation and finance charges.

Let’s start with depreciation or the value your car loses over time. If you’ve had your car for only a few years — three or less — it’s not worth the savings in gas to trade it in because you take a big hit on its declining value, Bartlett said.

Depreciation makes up about 48 percent of an average owner’s total vehicle costs in the first five years of ownership, according to Consumer Reports. Fuel cost averages about 21 percent of total cost of your vehicle ownership.

And then there’s the finance charge. If you’re two or three years into your current loan, you would be trading up to several more years of car payments, plus interest.

Let’s look at an example laid out by Consumer Reports. Suppose you have a 2005 Ford Five Hundred SEL V-6 sedan that gets 21 miles per gallon. You want to trade it in for a 2008 Toyota Prius hybrid, which gets 44 miles per gallon. The per-gallon mileage figures are based on Consumer Reports’ own fuel-economy test results.

Let’s assume you drive about 12,000 miles every year. At $3.75 per gallon (and, of course, this national average has changed by the time you read this), you’ll pay about $2,000 in gas this year driving the Ford, according to Consumer Reports estimates when it did these calculations. If you owned the Toyota, your fuel bill for the year would be about $1,000.

That $83 a month in savings looks darn good right now.

But wait, says Bartlett. When you calculate the total cost of ownership (depreciation, finance charges for a 60-month loan, insurance, maintenance, sales tax and fuel costs) the Toyota will cost about $9,000 to own for the first 12 months, while the Ford costs $6,000 during the same period. That’s a difference of $3,000.

Other examples of what it might cost you to downsize to another vehicle are available at www.consumerreports.org. Look for the link on the home page under “Today’s News.”

ConsumerReports.org has recently launched a “Guide to Driving Green” special section (ConsumerReports.org/fuel) with tips on how to improve fuel economy, lists of models with the best fuel economy and guides to the latest hybrids and alternative-fuel vehicles.

Write Michelle Singletary at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071.

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