Get your free car – Part 2

Not long ago, I talked about the Renault Logan, a car with good mileage and a very low sticker price that made converting from a gas-guzzler to a better mileage car virtually free, based on gas savings. Unfortunately, it is not available here in Canada yet.

First of all, it should be clear that I don’t support one particular manufacturer of vehicles. We should all celebrate superior fuel and emission technology wherever it may come from. In recent surfing, I came across the Volkswagen Polo BlueMotion, which is sold in Europe for roughly $20,000. It has a combined mileage rating of 60 miles per imperial gallon (4.7 liters / 100 kilometer).

The average vehicle travels 20,000 km per year (12,000 miles) for discussion purposes and the cost of gas is $1 dollar per litre. The annual fuel cost for the Polo at 60 mpg is $908. A typical gas-guzzler at 20 mpg would cost $2,724 per year in fuel. The difference saved is $1816 per year, which although substantial, is not quite enough to make the payment on the car.

What is likely to happen within several years are dramatic increases in fuel cost. My calculations indicate that fuel at $1.57 / litre would provide enough savings to pay for the vehicle over a long period. BINGO! You now get your car free, paid off with the savings ($2,851) you would have made at the gas pump every year. (Calculated with interest at 7%, payments over ten years) If payments can’t be stretched that far, the car will cost you money out of your pocket.

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The Polo is a 1.4 L three cylinder turbo-diesel with CO2 emissions of 102 grams / km. In comparison, the best vehicle on Natural Resources Mileage list is the Prius hybrid, which has 98 grams of emissions and a fuel rating only slightly better. The Prius costs $10,000 more than the Polo.

Alas in real life, you can’t have your car that almost makes it’s own payments, because they aren’t sold in Canada yet. You might ask your Member of Parliament or local Member of the legislature why we don’t insist that manufacturers sell more models with excellent fuel ratings.

After the oil embargo of 1973, fuel efficiency standards called CAFE (corporate average fuel economy) were introduced in the United States. As with all things, enthusiasm waned as fuel prices took a dive and Canada never saw the need to define its own objectives. Groups such as the Sierra Club of Canada note that while Automakers stonewall efforts to increase fuel economy in North America, they are implementing improvements in Europe.

In a discussion with Jack Keir, the Minister of Energy, it was suggested that the Provincial government is preparing a program to help New Brunswickers purchase vehicles with high fuel economy. This would be in addition to the Federal program in place.

The amount of the subsidy per vehicle or the method of program delivery is always subject to debate. It would be possible to finance this program by only a cent or two at the pumps. A one-cent increase per liter affects the average person by $16 per year. The revenue would be $15 million. Considering that approximately 30,000 vehicles are purchased in NB each year, perhaps 6000 units would be high economy units. The subsidy could be $2500 on the 20% of vehicles purchased.

Think of this idea as a lottery ticket where a huge number of people win big every year. Your ticket is $16 / year and you decide if and when you want to win. When you do, the feds chip in $2000, the province $2500 and your gas bill saves you $1800 a year. If the price of fuel rises, the savings are high enough to pay for your new vehicle over time. The odds on this bet are considerably better the Lotto 649.

Now if we could only get some exceptionally high economy vehicles on sale here. Detroit based manufacturers have consistently been trying to convince us that we need 320 hp in a car. They don’t realize that the real target is 100 mpg and it isn’t far away if they could focus on the future.

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