[V8] running the numbers

[Mike Arman]

Idly playing with my calculator this afternoon, came up with some 
interesting figures.

1990 V8Q, value of car about $5k (generous), gets about 20 MPG.

Remaining service life is about 80,000 miles (assumes 120K on the car), 
fuel used in 80,000 miles is 4,000 gallons at $4 a gallon, or $16,000. 
Residual value of car set at zero - cost to drive 80,000 miles is thus 
$21,000, or 26.25 cents per mile.

If I set the value of the V8 at $3,000, my cost to go 80,000 miles is 
$19,000, or 23.75 cents per mile. If the residual value of a 200K V8Q is 
$1,000, my cost is $18,000 - or 22.5 cents per mile.



2001 Honda Accord, value of car about $8K (guesstimate), gets something 
like 26 mpg (real world).

After the same 80,000 miles, the residual value of the car will be in 
the $4,000 range, so the "cost of the car" is $4,000. 80,000 miles at 26 
mpg at $4 a gallon is $12,300 in fuel, so to drive 80,000 miles costs 
$16,300, or about 20.375 cents per mile.

Basically, it costs me a not quite a nickel a mile more to drive my V8Q 
than it does to drive my Honda. Yes, I know maintenance is more 
expensive, but I do a lot of it myself. Insurance is actually less (!) 
so that offsets part of the maintenance cost.


Now I'm going to pull some numbers out of the air - we find a car that 
delivers 40 mpg and costs $25,000. After 80,000 miles, the residual 
value is $15,000, so the "cost of the car" is $10,000 for the 80,000 
miles plus 2,000 gallons of fuel at $4, for $8,000 in fuel, total 
$18,000 making the net cost 22.5 cents per mile.

Suddenly the V8Q doesn't look quite so bad . . . even if it does hurt at 
the pump. We need to look at TCO, total cost of ownership, just like the 
computer guys.

Sounds like the best strategy is to find an older, low value car that 
gets 30 mpg or better, and drive it forever.

(Unfortunately, in most parts of the US, mass transit is rarely a viable 
option. Where it IS available, you'd be way ahead taking the train.)

Where it hurts is if you drive 400 or 500 miles a week - which is not 
unusual. Your cost per mile doesn't go up, but you are putting on a lot 
of miles in a short time, so you are spending a large amount between 
"revenue events" (weekly paychecks). It doesn't hurt so much if you 
drive only 10K or 15K miles a year, then the bleeding is slower.


Anyone see any major holes in my methodology?

Best Regards,

Mike Arman
90 V8Q, which may not be such a bad deal after all, and is MUCH nicer to 
drive than the boring Honda Accord.