Should We Switch to a More Fuel-Efficient Vehicle?

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One great habit in the Enchumbao Household is the constant pursuit of savings. Just when we think we’re done with maximizing savings in a certain category, we revisit it to see if we could push it further. After all, a dollar saved is a seed that gets planted to provide us with passive income. In 2014 we moved within two miles from work and that brought substantial fuel savings. This year we sold our second vehicle since it sat in the driveway most of the time. We kept the 2007 Toyota Camry which I purchased pre-owned back in the year of its release. We paid off the car a while back and it’s nice to not have any car payments.

Electric and hybrid cars are all the rave right now, and I have to admit, I do like where Tesla is heading with this. One thing is for sure, if I were to have one of these, I would hold on to that wheel when passing a truck or on sharp curves, as some unfortunate person found recently! Self-driving car is a fairly new technology that I’m sure has some glitches.

This tweet by MMM prompted me to analyze our current situation and see if there’s a better alternative for us to save more money in the auto category.

We'd also probably go with the Toyota Prius.

Holy shit, that’s a lot in savings for a brand new car! “Mrs. Enchumbao, should we look into this?” That was my original reaction followed by a search or two. One of the reasons why we haven’t researched more fuel-efficient vehicles in the past is because, once we retire, we’re most likely going to move abroad without the car, so the long-term savings of such a vehicle won’t make sense for us. However, we felt compelled to look into an ad like this one promoted by MMM.

Which fuel-efficient vehicle could be right for us?

If we were to get a more fuel-efficient vehicle, we would probably start by comparing hybrids. Hybrids can go for a much longer range than an electric vehicle without needing a charge and that would allow us to go on long trips uninterrupted.  We could save money on electricity by plugging in the car at work, where it’s free. We’d probably go with the Toyota Prius so let’s use that vehicle for our comparison.

Fuel efficiency

Our Camry gets 24 miles per gallon on city driving and 34 on highway driving. A new Prius Hybrid would get 52 miles per gallon. These are according to specifications. A round-trip work commute is 2.6 miles long/6 minute-drive. (I know, it’s sick how close we live to work. Don’t get jealous, just move closer to work!) We carpool to work, so I usually drop off the wifey on the way to my building.

I plugged in our commute numbers at Fueleconomy.gov to make the fuel use comparison.

fuel-efficient

Cost of our one-way commute

Our commute costs us $0.54 roundtrip with the Camry today. If we were to become super fancy and drive a brand new Prius to work. It would cost us $0.20 a day. That’s a difference of $0.34.

How much would those savings amount to in a year?

We usually work 46 weeks out of the year, so the savings would look like this:

$0.34 x 5 workdays x 46 weeks = $78.20

Let’s say that we stay working for another 3 years, we’d save a whopping total of $234.60.

By buying a car we’d also have to pay sales tax, registration and other fees. We’ll never breakeven due to our short timeframe so the savings would be out the window.

fuel-efficient

We’re done here!

Folks, no need for us to spend more time on this. Upgrading to a more fuel-efficient choice failed the first set of metrics for us. No need to compare repair costs or add the hassle of buying and selling a car, inconveniences of registering it and other points of pain. Throw in the opportunity cost of paying for a new car instead of investing the money for the next three years, and it’s painfully obvious that we’d lose a ton of money by switching. I’m sure upgrading makes sense for other folks so run your own numbers if you’re thinking about upgrading.

If we were going to keep a new car for more than 10 years and/or we lived much further from work, then upgrading might have made sense over time. For the record, we’d only consider buying a new car if the savings were substantial, like the savings brought by the Ad posted by MMM. Or if we were to buy a car abroad and couldn’t trust the used cars on those countries. We prefer to let someone else drive it off the lot and take the 20% depreciation hit.

Our biggest savings were when we cut the commute a few years ago! Our Camry can keep calm. We’re keeping you home, safe and sound!

What would prompt you to upgrade to a hybrid or electric vehicle? If you made the jump, have you been able to save by switching?

Featured image: Mike Birdy

Please like & share:
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Mr. Enchumbao

I work for a large investment management company helping people save for traditional retirement. During my spare time, I help others save for financial independence and early retirement by writing for Enchumbao. My journey to FI began in 2012. I was in a lot of debt back then, but I turned things around and became debt free a few years later. My wife and I reached financial independence in 2017 and are preparing to retire by 2020.

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4 Responses

  1. LM says:

    We were able to save a ton due to DW commute being 30 miles round trip everyday and moving from a gas guzzler suv (18mpg) to a pre-loved Prius (46mpg).

    They were 7 and 8 years old respectively and we made an even trade so no acquisition costs for us. Which made the savings even more compelling.

    On a recent long range trip we averaged 56mpg!!!

  2. Great analysis. Sometimes the analysis is over before it even starts. We still drive a gas guzzler – don’t ask how we got it 😉 – but since we drive only very few miles (5-6K miles/year) it’s not really worth it to switch. We plan to drive our current car for a few more years and if more reasons accumulate (repairs and maintenance of an older car, gas prices, etc.) we will reconsider.
    Cheers!
    ERN

    • Hi! How did you end up with a gas guzzler!?! Just kidding, no judgment here. Overall, we drive very little as well. Sometimes I even forget that there’s a gas tank to fill. I’m okay with handling some repairs at this point. The biggest expense this year was replacing the alternator. We’re hoping to retire before our car so that we don’t have to spend on major repairs. Thanks for stopping by!

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