Tag Archives: Volt Payback

Let’s Talk “Payback”

26 Mar

I have read several articles about the Volt and automobile journalist and blog that compare the payback period based on fuel savings over purchasing an “equivalent” vehicle.  One even has put the payback period on the Volt as 27 years.

First – at least for me, I did not make the decision to purchase the Volt based on any kind of payback period or fuel savings.  I bought the car because I found it to be a very interesting car and it was reasonable in price and looked nice.  On driving it the (only) time I drove it immediately prior to signing paperwork, I liked how it felt and the seating.  It was in my price point and got better mileage that what I had been driving previously – but everything that I looked at got better mileage by some bit.

Now, before we go further, let’s discuss the “equivalent” vehicle concept.  Frequently, when people look at this, they choose a car built from the same platform and assume that is an equivalent vehicle.  This works pretty darn well when you are looking at a Toyota Camry vs a Toyota Camry Hybrid.  However, most of the time, comparing the Volt, they use the Chevrolet Cruze Eco.  When you use the Cruze, you are comparing a sub 20,000 dollar car with an over 40,000 dollar car.  I am sorry, but they really are not “equivalent” cars, as no one I have read about really would have considered a Cruze as their next car if they had not purchased the Volt.

Many Volt buyers that I have seen on the Volt Forum I like to watch (www.gm-volt.com/forum/) have been primarily previous European vehicle owners.  There are a some General Motors fans, of course, but they are still traditionally higher end GM vehicle buyers (Corvette, Cadillac, etc).

For my self, the other alternative vehicle would have been less than 2,000 dollars cheaper, still from CarMax.  It would have been a Mercedes C350 Sport.  The car would have had slightly more miles on it, but not a significant amount.  Many of the other people on the forum have stated that if they had not purchased a Volt, they would have purchased 5-serices BMWs, or Infiniti sedans, etc.  In short, for most cars, the Volt, as a 40,000+ dollar car is being purchased instead of another 40,000+ dollar car.

Once you realize this flaw in what the general media is reporting, you should realize that the “payback” model is flawed.  Looking at it this way, the payback becomes something like 0 – 2 years.  People may scratch their heads, but let’s look at new car price:  If I were going to buy a C350 Sport, with navigation, etc  MSRP would be close to 44,000, and the Volt the way I would choose it would be close to 44,000.  For simplicity, we are assuming tax incentives, rebates, etc don’t exist, which actually makes the Volt less expensive for many people.    In this example, the payback period for the Volt is immediate – based on fuel savings.