Tuesday, September 30, 2008

Save Money With a Hybrid?

So, fuel prices are coming back down significantly from their peak; in fact as much as a dollar here, and more in some other areas (the highest we saw here was about $4.39, prices are hovering around $3.35 now).

Even better, they look to remain relatively stable the rest of the year; but they are still significantly higher than they were when I moved back from Ireland at the end of 2003 for example (around $2.30 or so).

The fact is, fuel costs are still a fair percentage of our budget, and are likely to remain so fro the forseeable future. They're probably a fair bit of your budget too.

Although I work at home, and thus don't drive much; we have family that we visit frequently that lives 90 miles away, and who is our weekend babysitter etc... and all the normal running around attendant to a life with two adults, two kids, two dogs, two cats, a house etc...

And of course part of that life is that we need a truck. Really, a minivan or station wagon wont do it for us, we need the cargo hauling, towing, and ruggedness of an honest to god truck.

Said truck gets between 14 and 16mpg.

Our fuel costs on the truck right now run about $500 a month, on about 2000 miles of driving.

A while back we picked up a car that gets 26mpg to take over some of the mileage, and it's certainly helped. It basically kept our fuel costs constant through the big spike, as well as provided more flexibility in transportation and scheduling etc...

We had been a one car family for a while, but we ended up having to rent cars a couple times when we both needed transport at once, or when the truck was down for maintenance etc... so that purchase has proved its value. It's going to do so again in two weeks when we drive to Reno; given that we expect to run 2000 miles for the week, it's going to save us $200 in gas right there.

Still, the truck is still a gashog, and we're coming up on 120,000 miles.

I wasn't seriously considering replacing the truck for another two years though, since at that point it will be fully paid off, and it will probably be just about ready for a new motor, and new shocks (I've got the rear air suspension; not cheap to overhaul).

I WASN'T seriously considering it, until just recently; when Chevy came out with the Tahoe Hybrid.

The truck's had some great reviews. Apparently its around town mileage is even better than the 22mpg its rated for, so I think we'd at least hit the rated average; and supposedly the quality is really excellent.

Now I'm not one for hybrids in general. I don't believe in the whole "paying more to save the environment" BS; and I've yet to see a hybrid that wasn't both an environmental net negative anyway, and didn't end up costing more than you'd save.

Well, GM is in deep trouble right now, and they're offering some huge discounts on trucks... basically because no-one in their right mind is buying one now unless they absolutely need it.

My best friend happens to be a sales guy at one of the biggest GM dealers in the state; in fact he got us into our 26mpg car for $7,000 under book. He and I were shooting the breeze the other day, and he says to me "Hey, if you're looking to replace the truck, I can get you into the new Tahoe Hybrid, fully loaded 2wd, for $39,900...

That's about $14,000 off...

So I thought about it for a minute, and I decided to run the numbers.

The current truck payment is about $320, and we're paying $500 for gas on a 15mpg average and $3.50 a gallon. The truck has about a $4000 trade in value, and we could probably swing a $4000 down payment (though it'd make us cash poor for a while).

On a $40,000 truck, presuming a 6.9% interest rate (what we qualified for from GMAC), that would give us a 72 month payment (which I think would be nuts by the way, but they're doing it all the time now) of about $560.

At our current payment of $320, we'd have to save $240 a month to break even on the deal; presuming we don't have any other factors to account for (like increased insurance rates, or tax breaks for hybrids). Going to the hybrid would save us just under 50 gallons of gas a month, or about $175.

Oh and I think if you look at our numbers, we're about the BEST case you're going to see for a hybrid full size SUV, short of a delivery business; and we're still about $75 a month away from breaking even.

Of course that doesn't count the intangibles of driving a nice brand new truck, with a warranty. On the other side of course it doesn't account for the feeling of not having $40,000 in debt hanging over your head (new vehicles are ALWAYS a bad deal in this regard).

Now, that's against our current vehicle though. What if we were going to buy a new truck anyway; would the fuel savings between a hybrid and a standard SUV be enough to make up for the price difference?

The answer might surprise you...

The 6.0l hybrid 2wd Tahoe gets an average of 22mpg, and lists out at $53,000 with its only two options (navigation system and sun roof) selected (the 4x4 is another $3k). Current incentives make it just under $40k

The 6.2l 2wd Tahoe gets an avg fuel economy of about 16mpg, and lists out at... the exact same price as the hybrid model, when equipped the same way; with current incentives also bringing it down to just under $40k.


Although the hybrid is likely to have higher maintenance costs over its lifetime, the fuel savings alone could run to $175 a month at current gas prices if you drive as much as we do; and I'd think that would MORE than offset any additional maintenance costs, even presuming gas prices don't go up again (which of course they eventually will).

Honestly, if you're in the market for a new, full size SUV right now, the only reason I could see to NOT buy the hybrid, is if you needed the increased towing capacity of the 6.2l gas over the 6.0l hybrid (8500lbs vs 6200lbs).

I can't believe I'm actually recommending a hybrid.