I haven't subscribed in 10 years, but when I did I don't think there were 'paid advertisements" from anyone, only the page that pointed out false advertising.

Does CR now include advertisements?

 

Back in 2001 my father knew I was researching new cars and mailed me a copy he had. Wish I would have kept it.

The article appeared to be a genuine writeup. When I pointed that out to my father he was also very suprised.

 

Here's my take on the Purchase price/depreciation aspect of CR's analysis.

Looking at Kelly Blue Book I compared Suggested Retail Value for a 2003 HCH and HC EX, each with comparable options and 45,000 miles.

The Hybrid was $19,855 and the EX $16,080, Difference of $3775.

If the CR's premium of $4000 is correct then the Hybrid had additional depreciation of $225 dollars, not $2900.

Is that right?

 

There are four numbers needed:

HCH purchase price
HCH blue book price "n" years later

HC EX purchase price
HC EX blue book price "n" years later

Let me give you an example using the 2001 Prius and 2001 Echo. In 2001 we had to choose between a 1500 cc Prius and a 1500 cc Echo:

$21,000 - Prius 2001, new purchase price
$09,500 - Prius 2001 Ebay "Buy it now" (117,445 miles) #4616782257
--------
$11,500 - depreciation(*)

$14,200 - Echo 2001, new purchase price (ours)
$06,800 - Echo 2001 Ebay "Buy it now" (77,388 miles) #4618008441
--------
$07,400 - depeciation

Prius depreciation cost higher, $4,100(*) over 5 years . . . CR reports $3,200. Off but within the same order of magnitude.

Good luck!

Bob Wilson

* - First pass made a $1,000 error in Prius depreciation.

 

Bob is quite correct regarding the dollar amounts. Another way of looking at it is that the Prius lost 55% of its original value and the Echo lost 52% of its original value. Pretty close. Note that the Prius has gone half again as far as the Echo.

The problem with models and trims introduced in the last couple of years is that there is yet no good projection of what they will be worth when they are five years old. There have been some reports that some of them have actually appreciated when driven off the dealer's lot. Where this is currently true, I don't expect it to hold up as supply increases. But what the depreciation will be (either in $ or %) is not yet known.

 

If the $4000 original premium is assumed then yes you are 100% correct and CR is in error by quite a bit. I'd send them a letter and see if they print a correction or retraction. This double dipping is nuts.

To really do it right you should not assume that the $4000 is correct and instead start with the actual cost new on both cars.

 

There is nothing wrong with worthywads math. Using his method on your numbers $6800 (2100 - 17,200)original difference in cost, 2700 (9500 - 6800) current difference in cost yeilds the exact same $4100 (6800 - 2700) depreciation cost over 5 years you should have come up with. You do not need the original costs, only the original difference in cost.

The only math error I see is that 21k minus 9.5k is 11.5k.

 

One of the BIG assumptions in the CR study, is that the car buyer is buying a new car for the first time. They do not take into consideration the savings derived from getting rid of a less efficient older car.

I the first year of owning my 2005 Prius, I have saved $1645 in gas alone compared with the car I replaced (an Audi A4).

When I look at the depreciation in the first year, I lost $2800, but compared with my old car Which lost $5000 per year, I saved another $2200. ($5000 - $2800 = $2200)

When I did my initial analysis before buying my Prius, I determined that the savings over the 10 year life of the car would actully pay for a new one. [($1645+$2200)*10 = $38450]

Of course all this was comparing my savings based on a previous expensive car.

As a side note, many wealthy people will tell you (maybe!) that the real issuse is CASH FLOW not abolute $$$. Any way you can increase incomming cash flow while reducing outgoing cash flow make all the difference.

Maybe I am missing something here but it works for me!

 

Comparing dpereciation amounts for 2 cars with a 40,000 mileage differential
between them is not supportable in any shape, manner, or form. The results will always be falsely skewed due to the original false premise that the cars are equal. Show me an Echo with 117,000 miles and let's see what the difference is.

 

Sorry about that! I'll edit and make a note.

Bob Wilson