Recently by Eric Peters: The Love Affair May Be Over…
If you’re really serious about saving money on transportation, the very last thing you should do is buy a new car. Particularly a new hybrid car. It’s as counterproductive as trying to lose weight by ordering a diet Coke with your triple Angus Thickburger.
The car companies – like the fast-food places – don’t want you to realize this, of course. Their business model depends on you losing money (or gaining weight – or both).
Luckily, we’re not yet forced to buy new cars – or eat Thickburgers.
We still have the option to do something better – something smarter. And when it comes to cutting transportation costs, buying a cheapster is much smarter, money-wise, than buying a new hybrid.
What’s a cheapster? It’s a car like they ought to be making now but aren’t – for a variety of reasons, including government regulations that heavily compromise fuel efficiency for the sake of making them every more crashworthy (which typically means making them ever-more-heavy). Cars like the old Geo/Chevy Metro – made from circa 1989 through 2001. This car never had an engine bigger than 1.3 liters (many had a 1 liter engine) because it never weighed more than about 1,800 lbs. (early models weighed as little as 1,600 lbs.). As a result, it got 42 MPG – nearly as good as a new Toyota Prius (which weighs a beefy 3,042 lbs.).
A quick search of Auto Trader online ginned up two Metros for sale. The first, a ’97 with AC and only 45,000 miles, listed for $3,700 (see here) or about $20,000 less than the base price of a new Prius ($23,015).
I found another – a ’96 with 67k miles – for $2,495 (see here).
Think about this a minute. These cars cost almost nothing to buy – many people will be able to stroke a check for the whole amount, thereby eliminating the monthly payment. Meanwhile, had you bought a new Prius, you’d be paying about $400 a month for the next five years – and that’s assuming you bought one for sticker and pay zero interest. How much gas would you have to save to make up for what you just spent? Probably, you’d never reach break even. The difference in cost between the used Metros and a new Prius – about $20,000 – would buy roughly 5,000 gallons of unleaded regular at $4 per gallon. At an average 40 MPG, this is enough to keep the car going for 200,000 miles. Only then would a new Prius begin saving you money – assuming, of course, it’s still running by then.
Remember: The used Metro cost you zip per month. Your only fixed cost is fuel – and the Metro’s gas mileage is nearly as good as the real-world mileage of the Prius. (Doubters should check out a comparison test Car and Driver magazine did in 2008. A ’98 Metro hatchback was stacked up against a Honda Insight hybrid and a Toyota Prius. The Metro registered 42 MPG – right on the tailpipe of the then-new ’08 Prius’ 48 city, 45 highway.) The non-hybrid Metro is also a simple car – no battery packs or electric motors to sweat once the warranty expires. Even if the engine eventually requires work – including a complete rebuild – the work will not be cost-prohibitive. A new/rebuilt Metro engine and transmission would probably cost you around $4,000 for everything, done by a pro – and you’d be good to go for another 100,000-plus miles of 42 MPG.