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Surging fuel prices have been driving Canadians to buy small economy cars in record numbers this year, but a mid-size car may be a better deal.
Generous, and in some cases stunning, incentives have lowered the real price of many popular mid-size models to levels not seen in years, if ever.
Small cars may be less pricey overall, and they certainly use less fuel, but when a broad range of economic factors are considered — including the fuel economy savings of driving a smaller vehicle — the extra cost of moving up to a bigger car can be relatively small.
Take the Toyota Camry mid-size and its smaller cousin the Toyota Corolla. The 2009 Corolla, restyled and re-engineered at least in part to improve fuel economy, will save you $355 a year at the pump, or $1,420 over four years, compared to a four-cylinder Camry.
The money you save at the pump is only part of the economic equation in buying a new car. (Toyota)
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However, moving up to the much larger Camry will cost you only an extra $2,840 over a similarly equipped Corolla. The secret here is in the Camry deal. Toyota Canada has slapped a $4,500 cash incentive (which it calls Trading Dollars) on the Camry and that goodie takes much of the sting out of the Camry's original $25,900 price tag.
The Corolla, which is flying out of Toyota lots, has no sweetener of any kind. Doesn't need one. The sales numbers clearly say that Toyota hit a home run with its remake of the Corolla, with sales up a whopping 37 per cent through the first six months of this year. Sales of Canada's best-selling car, the compact Civic and a direct rival of the Corolla, were up 24 per cent.
The Corolla is good and has an excellent reputation for reliability and fuel efficiency, but it is also riding a sales trend sparked by the rising cost of fuel. In fact, Canadians have been buying economy cars in huge numbers this year.
COMPACTS SELLING FAST
DesRosiers Automotive Consultants reports that sales of small entry-level vehicles are up 12.1 per cent on the year in a market where overall sales are up just 2.7 per cent. Last month, all 10 of the top 10 best-selling cars in Canada were either compacts or subcompacts.
For the year, only the mid-size Camry has managed to crack the top 10. The compact Civic remains Canada's best-selling car, with the Corolla second and the Mazda3 sliding in at No. 3.
For many buyers, what may be overlooked here are the many moves that manufacturers and dealers are formulating to make slower-selling mid-size cars more affordable.
Moreover, today's mid-size cars, while more powerful than any rival compact, have been engineered for fuel efficiency — to the point that the fuel savings of buying a compact might not make much sense for buyers who not only want to save money at the pump but also need a larger, versatile vehicle to meet the needs of their lifestyle.
Consider the case of a Nissan Sentra compact versus a mid-size Nissan Altima. At current pump prices in Toronto ($1.26.3/litre), by opting for the smaller Sentra you would save just $126 a year in gas. Or the Civic, which would give you just $329 a year more in your pocket over the Accord, or $1,316 over four years.
But the money that you save at the pump is only part of the economic background to consider if you're in the market for a new car.
A deeper, more thorough look at all the numbers shows that thanks to some of the richest incentives in history being offered on mid-size cars, the privilege and convenience of driving a mid-size can be as little at $2,800 (for the Camry) or as much as $7,000 (for the Accord).
And that's factoring in the fuel economy benefit in real-dollar terms.
The Honda Accord is one instance where moving up from a Civic comes with a big price tag.
The Accord is a nice car, big, very reliable, very safe and with the popular four-cylinder engine it is nearly as powerful (190 horsepower) as a V-6 Accord of five years ago (200 hp). Yet fuel economy in the new Accord is rated at a healthy 9.9 litres/100 km for city driving, and 6.5 for highway.
The Accord is certainly not a dramatic gas guzzler compared with the Civic sedan, which registers 8.2 city/5.7 hwy.
But stepping up from a Civic to a comparably equipped Accord will cost you $7,116 — even when you consider the Civic's fuel-economy benefit ($1,316 over four years). That's with Honda offering a $1,000 gas card as an incentive to buy an Accord. Yes, we did factor that into the equation.
Here's how we know all this and more.
We crunched a range of numbers on nine of Canada's most popular mid-size cars and nine compacts — from annual fuel costs to the latest pricing discounts.
For starters, we calculated annual fuel costs using Natural Resources Canada's formula of 20,000 km a year, split 55 per cent for city driving, 45 per cent on the highway. All cars — mid-size and compact — had four-cylinder engines and were equipped with an automatic transmission, too.
SURPRISING FIGURES
Using fuel-economy numbers supplied by Natural Resources Canada, and in some cases manufacturers themselves, we then calculated how much fuel each vehicle uses in a single year when regular gas is priced at $1.26.3 a litre. (Where did that number come from? M.J. Ervin and Associates says it was the average pump price last week in Toronto.)
All this information allowed us to calculate the fuel-economy benefit, in dollars and cents, of driving a compact versus a mid-size.
In most cases, the benefit is not as great as you might think. For example, the Chevrolet Cobalt would save you just $50 a year over the new Malibu mid-size sedan.
Then we looked at pricing, using a combination of the manufacturer's suggested retail price (MSRP) and figures provided by the online pricing service www.carcostcanada.com.
That was a good starting point — but just that.
Today the car business is awash in incentives and sweeteners, all designed to prod people into buying — and no segment is richer overall than mid-size cars. We used www.carcostcanada.com and the manufacturers' own data to gather detailed information about current incentives (though these change often and regularly, so it is worth checking up-to-the-day pricing reports).
This is where things got really interesting.
The Camry may carry a generous $4,500 deal, but the Hyundai Sonata comes with a $3,300 25th Anniversary incentive that takes the base MSRP of a Sonata GL ($23,395 including automatic transmission) down to a very reasonable $20,095.
Another standout offer is the $6,000 in Stackable Cash offered on the Mazda6 Sport GS. (Stackable means it can be combined with other Mazda Canada offers). This deal is only slightly richer than the $4,299 in combined Family Pricing and Delivery Allowance that Ford Canada has on the Ford Fusion SE.
All this money on the table brings the Mazda6 hatchback ($27,495 MSRP) down to $21,495, while the Fusion — which according to Consumer Reports is one of the most reliable family sedans available — slides in at $20,800.
Once we had useful numbers for the mid-size sedans we did the same for nine compacts. The Chevrolet Cobalt, for example, is available with a combined $2,250 in sweeteners, $1,250 in a Retail Deliver Credit and another $1,000 in Finance Cash.
The Ford Focus? Combine $1,652 in Family Pricing with a $1,200 Delivery Allowance and you have $2,852.
Three other stand-out discounts: $4,200 in Trading Dollars on the Kia Spectra; $2,850 in 25th Anniversary Pricing on the 2008 Hyundai Elantra; and $3,700 in Stackable Cash on the Mazda3 Sport.
Finally, to get a number that represents the actual added cost of moving up from a compact to a mid-size car, we factored in all these incentives on all these cars — as well as the fuel economy benefit in real-dollar terms.
The conclusion? Hands down, the Camry is the best buy for anyone who wants to move up from a very good compact Corolla to a mid-size sedan. And perhaps that's why the Camry is the only mid-size car among the top 10 best-selling cars in Canada.
