Don't Trade Your Gas-Guzzler
Friday, July 18, 2008; 12:00 AM
Visits to the pump have become painful. They were bad enough when gasoline was $3 a gallon for regular unleaded. Prices now exceed $4 a gallon and seem headed toward $5 a gallon by summer's end.
Now, the full-size sport-utility vehicle that seemed like a good idea two years ago looks like the biggest consumer mistake you've ever made. Your lust for horsepower has come back to kick you in the pocket. You want to dump your ride, get out, get something that sucks less fuel. You want to reduce your pain at the pump.
Do the math. Taking a dump to relieve pain at the pump might be another big mistake.
- Do you owe anything on your current vehicle? How much? No bank or finance company will forgive that debt, which means that the money you owe will be rolled into financing a new auto loan. That could wind up costing you a lot more than the money you are spending at the pump. And we haven't even added taxes, fees and insurance related to the new vehicle, all of which can cost you plenty.
- Let's say that you have a big pickup truck or full-size SUV. The resale values of those models have plummeted. Some dealers are even refusing to take them on trade-in. That means, assuming that you still owe the bank money for that truck or SUV, the likelihood is that you are upside down in your ride, meaning that you owe more money than the vehicle is worth. Dumping under that circumstance makes little sense, because you will be taking a double hit -- substantially diminished resale value plus the cost of rolling your current vehicle loan into one for a more fuel-efficient car or truck.
Look at it this way: If the aim of reducing your pain at the pump is to keep more money in your pocket, you aren't going to do it in a fit of economic hysteria -- dumping your gas-guzzler and buying something else without running the numbers. You are likely to wind up in a deeper financial mess.
So, what to do:
- Drive smarter. That means consolidating trips, eliminating unnecessary driving, reducing vehicle weight by getting the junk out of your trunk, avoiding jack-rabbit starts from stop and... slowing down.
- Spend smarter. How much money are you wasting? Cigarettes? Now's a good time to quit. Cut 'em out. Fast-food junkie? You're already spending more money for gas. But isn't it better to put that money in your fuel tank, instead of the septic tank? Adjust your spending accordingly. Here's betting that your budgetary adjustments will help you do a better job of coping with pump prices.
If you must buy another car, shop for used models first; and look for four-cylinder jobs. Check out www.greencarjournal.com for recommendations on the most fuel-efficient models, category by category. Check out www.repairpal.com for an authoritative rundown on how the used car or truck you are thinking about has held up in the real world.
Note: The same market that has slapped gas-guzzlers with super-low resale values has awarded gas-sippers with higher resale prices. (You will notice something similar occurring in new-vehicle sales as well. Fuel-efficient, four-cylinder models are king. Models with consumptive V-8 engines are going begging.)
If you must buy new, again, check out www.greencarjournal.com for the most intelligent recommendations on what fuel-sippers are available in the marketplace.
Keep in mind that going hybrid might not be the most intelligent move. Why? Hybrids continue to come with premiums. There are any number of traditional combustion engine cars that offer comparable fuel efficiency. Hybrid technology, especially that part pertaining to batteries, is changing rapidly.
I am not suggesting here that you should allow the perfect to become the enemy of the good. Current hybrid technology, most of it dependent on nickel-metal hydride batteries, is good. But it is by no means perfect. Nickel-metal hydride batteries are heavy. Weight is an enemy of fuel efficiency. Work is moving apace on lighter weight, more energy-efficient lithium ion and lithium polymer batteries. Somebody somewhere will soon have a battery breakthrough. When that happens, all hybrid vehicles with nickel-metal hydride batteries will become obsolete overnight.
That means people buying current-generation hybrid vehicles should think of them the way they think of laptops and iPods. The technology they bought today is good. But it is not perfect. That means it will be obsolete tomorrow. Enjoy what you've bought today. But be prepared to live with it tomorrow.
That's it. Think before you dump. Shop wisely.