Home » Blog » Fuel Economy: A Tank Full of Cash

Fuel Economy: A Tank Full of Cash

Follow us! twitterrssinstagramby feather

Fuel Economy and How/Why to Figure it Out

A while back Sarah wrote a post about buying a “new to us” car.  When buying a car there are so many things to consider – so many features to balance.  How much the car has been driven, if there have been any accidents or liens put on the car, signs of rust or other factors about condition.  You need to factor in style – SUV, sedan, truck, coupe, crossover.  Then there are design features like sunroof, backup cameras, paint colour and navigation consoles.  One stat that people always look at, even if they don’t understand it, is the fuel economy.  This is a very important factor in the ongoing cost of the vehicle.  I doubt I’m alone in not giving it fair play in terms of the financial decisions involved with a car purchase.

What Is Fuel Economy?

Fuel economy is a measure of the amount of fuel the vehicle takes to move.  Here in Canada we look at how many litres of gas it takes for the car to drive 100km.  For our American friends there are about 4 litres in a gallon.   This stat is taken in 3 different ways – highway driving, city driving and then a combination of the 2.  The car we bought for example (2012 Hyundai Tucson) is 11L/100km city, 8L/100km highway and a combined of 9L/100km.  In the United States they use MPG or Miles Per Gallon.  While in theory it is the same type of measure – the values are reversed.  Instead of figuring out how many litres it takes to go 100km it measures how many miles you can go on a single gallon of fuel.  For this stat our car has 22MPG city, 29MPG highway with a combination of 25MPG.

Why Is Fuel Economy Important To Finances

When making a financial decision regarding the purchase of a car the focus tends to be on the sticker price or the financing rates involved.  Fuel economy is usually part of it, but since there isn’t a dollar figure attached for fuel economy it doesn’t seem to play as big of a part in the financial part of your decision.  Most people tend to see fuel economy as either an environmental benefit, or the convenience of not having to fill up as often.  I’m sure there are people that make the connection – but it isn’t a major player.  The fact is that fuel economy can have a bigger impact on your wallet than sticker price.  Sarah and I are a Hyundai family (both of our cars are Hyundai ) so I’ll use some information from their 2017 line up (Canadian pricing).  Car prices change so I’m using pricing as of this post without accounting for any sales/deals.

Scenario One – Sedan

Vehicle: 2017 Hyundai Elantra

Sticker Price: $14,276.00

Finance: $322/month for 48 months

Fuel Economy: 9.1 City, 6.6 Highway, 8.0 Combined

Driving an average of 400kms a week, and with a gas cost of say $1.10/L that would make your 4-year cost for payments and gas on this vehicle about $22,790.00 or $475/month.  The fuel portion of that is $7,321 or $152/month.  Gas accounts for 32% of your vehicle cost.

Scenario Two – SUV

Vehicle 2017 Hyundai Sante Fe Sport

Sticker Price: $28,599.00

Financing : $572/month for 48 months

Fuel Economy: 11.1 City, 8.6 Highway, 10.0 Combined

With the same information in scenario one your 4 year cost is now $36,629.00 or $763/month.  The fuel portion is $9,152.00 or $191/month.

So while you are spending a lot more on the SUV regardless due to the sticker price– it is important to remember that choosing between the two cars will hit your gas budget as well.

How Does The Math Work?

Okay so if I’m telling you to account for it I should probably make sure you know how the math works.  This isn’t hard at all – I’m confident you have a calculator on your phone or access to a spreadsheet of some kind to make it cake.

While some commutes are almost all highway, using the combined fuel economy is a good way of at least comparing apples to apples and having a rough idea of what to expect.  Since the fuel consumption is a number of litres per 100kms – just take whatever number that is and divide by 100.  This gives you the number of litres to drive a single kilometer.  Now take the number of kilometers you drive a week, multiply by 52 weeks per year and however many years you are basing your calculation on.  This gives you the total litres of fuel you’ll need in that period.  Lastly – multiply that number by your average fuel cost in your area and presto chango – you have some data!

Here is an example:

Combined Fuel Economy is 9 Litres/100KM

9 Litres divided by 100 = .09 Litres – that is the number of litres to drive a single kilometer

.09 Litres multiplied by 500 (number of KMS per week driven) = 45 Litres of gas per week

45 Litres multiplied by 52 weeks in the year = 2,340 Litres of gas

2,340 Litres of gas multiplied by the average cost/Litre of fuel in your area gives you a rough estimate of your annual fuel cost on the car.  I say rough because posted fuel economy doesn’t account for the different driving styles – and highway can often mean traffic jams which are bad for fuel economy.  So the numbers work for comparison between vehicles but probably shouldn’t be relied on to do your budget.

How The Data Helps

More and more the market for hybrid cars is heating up.  The infrastructure in most areas isn’t quite ready for fully electric cars to dominate but people are looking for a break at the pumps.  The problem with hybrids is that they tend to be a bit pricier on the ticket price.  If we use the formula above, the numbers don’t seem as scary.  Keeping with Hyundai – I’m going to compare the 2017 Sonata with its Hybrid counterpart.

Base Model

Sticker Price = $24,799 or $492/month for 48 months on financing

Fuel Economy = 9.4 city, 6.7 highway, 8.2 combined

4-Year Total Cost = $31,131 or $648/month

Hybrid Model

Sticker Price = $29,649 or $618/week for 48 months on financing

Fuel Economy = 5.9 city, 5.3 highway, 5.6 combined

4-Year Total Cost = $34,773 or $724/month

While you are paying more – the fuel savings continue after the financing period of over.   Using the fuel economy you can determine your ROI on upgrading your fuel efficiency.  For the Sonata example above, it would take about 10 years to break even on your investment.

Every Cent Counts

I know we aren’t talking big money – when you are buying a car you should be focused on what you need and what you can afford.  Fuel costs are a major part of this and while you shouldn’t base your decision solely on these numbers it is worth considering as part of your final choice.  Keeping your tires properly inflated and preventative maintenance are great ways to maintain your fuel economy as well.

Have you ever put much thought into the fuel costs associated with the fuel economy of a car? If not – hopefully you will next time you walk into the dealership.

Scott

Like what you read?  Wanna be in the know? Sign up for our weekly newsletter that comes out every Wednesday.  Also when you sign up you get our free communication guide – Talking Money: 3 Tips to Improve Communication.  Click here to subscribe!

 

 

Leave a Reply

Your email address will not be published. Required fields are marked *