There is a lot of consumer angst emanating from the unrest in the Mideast and disaster in Japan. And with that comes concern about rising fuel costs and a scramble for fuel-efficient vehicles. For those without a pressing need to replace their current vehicle, Kelley Blue Book – long known for its knowledge and analysis of the used car market – advises to hold onto what you currently drive. And that advice would be especially true if the vehicle you own and operate is a truck or SUV.
In their recommendation, KBB's team cited 2008, when gas prices exceeded $4 per gallon in some parts of the country. Many consumers reacted by selling what they perceived to be their gas-swilling large vehicles (suffering low trade-in values from a depressed market) and purchasing something more fuel-efficient at the top of its market. That process is expensive, especially if taking a hit of several thousands of dollars to dispose of a late-model SUV, when on an annualized basis your savings in driving an economy car may only be in the hundreds. As we noted recently, you should do the math before writing a check. The difference in cost of operation for a vehicle delivering twenty miles per gallon (over 15,000 miles) and thirty miles per gallon over the same amount of annual driving (even at $4/gallon) is only about $80 per month. KBB would seem to be right in advising caution before taking a loss on what you're currently driving – or paying a premium on that next 'small' thing.
If you must trade, Alec Gutierrez, manager of vehicle valuation for KBB, has some sage advice. "For those in the market to switch to a more fuel-efficient car, we suggest looking at subcompact vehicles to get the most bang for your buck. While they are not necessarily the most amenity-laden cars on the market, the Nissan Versa, Toyota Yaris and Ford Fiesta offer competitive fuel economy in an affordable package."
In addition to providing a comprehensive list of vehicles delivering 30 miles per gallon or better, KBB offered this one caveat for prospects looking at hybrids. While offering the best EPA numbers – especially in stop-and-go driving – a hybrid typically costs more upfront. And despite their eco-friendly reputation, cost of ownership over a five year period can be as much as $4,000 more than a new Hyundai Elantra, a car with a 40 mile-per-gallon highway rating and one of America's longest powertrain warranties.
As always, the choice is up to you. That said, in this economic climate holding onto your money may be the best strategy.