Saturday, February 27, 2010

Prius clarification

When people find out I drive a Prius now, the reaction generally consists of the following:

"Do you know you'll never get your money on that?"

"You have to replace the battery in two years."

I'll tackle the second question first since people focus on that. The battery in the Prius has an eight-year or 100,000 mile warranty on it so the manufacturer will cover it if it conks out before that. The dealer did tell me that they have never replaced a battery outside of the warranty period though. I know you can't generally trust a dealer, but I figure they had no reason to truly lie here. Also, I do plan to drive this car at least eight years, if not longer; after all, I did drive my Corolla for nearly 11 years, and so if battery replacement comes up after eight years, that's something to deal with then.

As for the "you'll never get your money back" statement, the first thing to emphasize is that a car is NOT an investment. Regardless of the vehicle you choose to drive, you will never get your money back; it's a depreciable asset from the moment you drive off the lot. It's just a question of how quickly your car loses value and prior to the Toyota recall brouhaha, Toyotas held their value pretty well (my 1999 Corolla, not involved in any recall, is still worth about $3500 to $4000 according to Kelly Blue Book).

Now the Prius is a wee bit different in the sense it's the one car that once sold at higher prices USED rather than new; but that was when gas prices were higher -- I don't expect that to happen now (and again, when you drive it for eight plus years, resale value becomes less and less important).

The question is whether the additional cost of a Prius is offset by its fuel savings. A lot of studies, including Consumer Reports, have said no, but most of the comparisons are made to a Civic or Corolla. I find this to be a fallacy because a Prius is NOT the same as a Civic or Corolla in terms of features and size. When I was looking for a new car last summer, one of my requirements outside of fuel efficiency and reliability was that it needed to be bigger than the Corolla I was replacing; I wanted to be able to fit four adults comfortably into the car. Given the timeline of how long I intend to own the car, I wanted something bigger that could fit in nicely with any life changes. The Prius is about the same size as a Camry inside, maybe a little smaller, but there was no way a Corolla/Civic would fit my requirement for a bigger car.

It'd probably make more sense to compare the Prius, with all of its features, to a midsize hatchback or sedan, which cost more than a Corolla/Civic. When I compared my Prius to a Camry, I came out ahead, but I also got super deals on my Prius so I wouldn't necessarily take my calculations as representative of what the truth really is; I won't get the hybrid tax credit on the Prius, but I will get to deduct my sales tax on my federal tax return this year, so that will be an additional savings that you can't count on year after year (and this savings applies to any vehicle purchased in 2009, I believe). I honestly don't believe the difference in price is that big when you compare the Prius to similarly sized cars with similar features.

In my next post on this subject, I will compare three cars -- the Corolla, the Toyota Matrix, and the Prius -- to show the operating costs of these vehicles.

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