April 30, 2008

How to save on gas #2 - efficient cars

New vehicles on the market today can have MPG ratings of anywhere from 12 MPG for a large pickup truck all the way up to 48 MPG for a Toyota Prius. If you're a typical American driver then you log 12,000 miles on the road each year. At $3.25 per gallon that means the cost difference between that big truck and the Prius is $3,250 versus $812.50 per year. Thats a $2,437.50 potential annual savings difference.

I know that some of you have a need a 4WD pickup with V8 engine cause you work construction and you need to haul things. Or you may want a large SUV because you have 4 kids and you frequently haul them and their friends around town. So a Prius or similar smaller vehicle may be impractical for your needs. But you might want to challenge those thoughts to be sure you're making the right financial choice. Do you really use your pickup to haul stuff frequently or could you instead buy a car and occasionally rent a uhaul to haul items if needed or have things delivered? And does your family size really warrant a large vehicle? I'm sure some of us could live just fine with other vehicles and we don't necessarily need the biggest pickup or SUV. Look at it this way: What is more important, having more hauling capacity or saving $1000-2000 a year in gasoline?

Still, I'm sure many people with larger vehicles do have a practical need for them. But you can still save money on gas based on your choice of vehicle. If you have a need for a pickup then consider a 2WD over a 4WD. Most of us don't have any use for 4WD most of the time and 4WD vehicles get lower mileage. If you need to haul a lot of people then consider something like a hybrid SUV. The Toyota Highlander hybrid seats 7 and gets 27 MPG city and would save you $1156 a year in gas over a typical 15MPG SUV.

But I still realize larger vehicles are necessary for many of us. So I would at least recommend comparing vehicles within your class and look for better MPG. The governments Fueleconomy.gov site has a page to search for MPG by vehicle class. So you can go there and compare MPG among pickups or SUVs or family sedans. For example : 4 wheel drive trucks range from 12MPG to 17MPG city. Thats a $2294 to $3250 range or as much as $955 annual difference. Or if looking at family sedans the range is 15MPG up to 48MPG for the Prius. With an annual range of $812.5 to $2600 or annual difference of $1787.50.

Generally I wouldn't recommend buying a brand new car given the high depreciation within the first 1-2 years of vehicle ownership. Heres a page with a list of high MPG newer model used vehicles. Or if money is especially tight then I'd recommend looking for a decent '90's cars like a1995 Geo Metro 37MPG city / 44 highway or 1995 Honda Civic 35 city/41 highway.

Furthermore keep in mind that the amount you save on gas will benefit you every year that you own the vehicle. While we can't predict the future, its quite likely that gas prices will remain high in future years. Lets say you're comparing a Toyota Camry to a Toyota Prius and expect to keep the car for 5 years. The 2008 Camry CE retails for $18,570 and gets 25mpg average while the Prius retails for $21,100 and its mileage is 46 mpg. If you drive 12k miles and gas costs $3 then the Camry will cost $1440 a year in gas and the Prius would be $782. Thats a $658 annual savings per year or $3290 over 5 years. That more than make up for the cost $2,530 differential between the two models.

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