An investment vehicle rolling on four wheels - doing the math

[Dover]

An investment vehicle rolling on four wheels
Finance
By SCOTT BURNS
Universal Press Syndicate

Allow me to introduce a new investment vehicle: your car.

No, I'm not talking about investing in cars that rise in value. We all know that virtually never happens. Cars lose value faster than money. Buy one in the morning, and it will lose value before it hits the garage.

So your car isn't a true investment vehicle.

But its fuel efficiency can be. Exchange your inefficient vehicle for one that gets better gas mileage, and you'll consume less gasoline. Every gallon not consumed is money not spent.

As many readers know, the Burns family started driving the Toyota Prius hybrid last year. By my calculations, trading in my 18-mile-per-gallon turbo New Beetle for the 45 mpg Prius saves about 500 gallons a year. At $2 a gallon, that's $1,000 a year.

To have an extra $1,000 a year to spend on gasoline, I would need $1,176 in dividends before the 15 percent tax rate on a stock investment. And to earn $1,176 in dividends from the S&P 500, I'd have to invest $78,431 because the S&P 500 yield is only about 1.5 percent....cont'd

http://www.chron.com/cs/CDA/ssistory.mpl/business/2727288


That's a lot more than most people have in their 401(k) accounts.

[Racenut20]

1. There is a bit more involved than just fuel cost.

Start with cost of the vehicle and go right on down to tire wear.

[Dover]

2. Yes but tire wear is not unique to this car...where as fuel efficiency is

for comparison's sake.

[AndyTiedye]

3. If Your Old Car Sucks (Too Much Gas), Replace It

But if your old car doesn't suck and you don't drive that much,
it may be hard to justify replacing it. That said, you didn't mention
the tax break for hybrids, or the fact that they get to use the
carpool lanes in some states (such as California).

What are they doing in the new beetles that cause them to burn so
much gas? 18 mpg??? I had a full-sized van back in the '70s that
got that. A lot of SUVs get better than that. A turbo shouldn't
hurt your mileage that much unless you have a lead foot.
Are you sure ther wasn't something horribly wrong with your old car?

My 10-year-old Civic del Sol gets almost 40, and that's with lots of
mountain driving. I'm not sure a Prius would do any better, and at
best, the difference would be small.
A Honda Insight at 66 mpg would be another matter. They seem to be
unobtainium though. Does anybody here have one of those?

If Honda made a Del Sol hybrid they'd sell so fast they'd burn rubber
coming off the lots.

I see from your calculations that the car is driven about 13,500 miles
per year. That is a bit more than average, I think, and considerably
more than any of our cars get in a year.

Telecommuting is good. Some of the money that others spend on cars,
I spend on a fast Internet connection.

[trogdor]

4. What they should do to get the dittomonkeys on board.

How about a hybrid luxury sedan. Imagine a Lexus that seats five in lavish comfort, goes 0-60 in 8 flat, is whisper quiet (thanks to the hybrid system), and gets 40 MPG. I read in one of the car magazines that Toyota made an exotic sports car prototype with a top speed of 155 MPH, acceleration and handling like a Ferrari, and still gets 35 MPG.

The cost of the hybrid system is much easier to hide in a luxury car than in an econobox, so people with $50,000 to spend on a new car would have no problem with an option costing $2,000 that improves the performance of the vehicle. Then you get people like Brock Yates all enthused about it, and within a few years, even the Big Three have gotten religion.

Back on topic, the Insight is a first-generation vehicle - a concept car that was available for sale to the public. I've heard it sucks donkey balls, but was promising the year it was introduced.