Wednesday, 21 September 2011

Attempting quantitative decision making

Information provision to support car buying is poor to misleading. Most of the models and guides to cost of ownership are inadequate. One of them included petrol at 71 pence per litre. I wish! The nearest to usable or useful is the one at Parkers, but that didn't meet my modest needs. What needs to go into a cost model?
Insurance; not an issue for me, but for young male drivers, insurance costs must dominate. Maybe the meerkats can help, but the car-buying sites and magazines didn't address this. It is a topic that either needs doing really well or not at all. There are two schemes for insurance groups; 1-20 and 1-50, It would help if everyone made it clear which they are using.
Cost of money (between purchase and re-sale); the banker's huge cut between lending and borrowing makes a big difference. If you are borrowing to buy a car, then the cost of money will be an important factor. If you are using savings, then the derisory interest rates on offer is all you are losing. Hard to put in a generic model.
Maintenance and repair costs; the big issue here is non-engine electronics, and the journalists have not got a handle on these yet. Mechanical reliability is almost a given for most sensible makes (certainly all those on my shortlist). The Which? survey showed non-engine electronics as being reported betwen 20% - 40% for cars 4-8 years old, including well-rated cars. Lots of pain and expense there, also lots of uncertainty and difficulty in modelling.
Road tax; for motorway driving, the ultra-low road tax options seem inadequate, so I was resigned to paying more than the £30 specials.
Fuel costs: Fuel has gone up so much lately, it is hard to have a mental model of the benefits of fuel efficiency. Journalists tend to talk in dramatic terms about the topic. Needs some detail in the modelling - especially expectations of future prices. Taking annual mileage of 6,000 and petrol at 133 pence per litre, I got the following. A car at 38 mpg (book figure for the Subaru) will cost about £950 p.a. in fuel. A car at 50 mpg (Honda Jazz perhaps) will cost about £725 p.a.; a range of £225 p.a. - not the dominant factor it is made out to be. Getting estimates of real fuel usage is hard, as the book figures are probably gamed. People on the web report getting 44 mpg for a Nissan Note on a long run. All estimates compounded by the inevitable confusion between odometer distances (10% over-reading) and actual mileages.

All in all, running the numbers on buying a car is not as easy as might be expected. The published guides are misleading by and large.
We called in at the Subaru dealer when shopping nearby. I had not been in an Impreza before, so needed to check the reality. My wife said "It's a very nice car". Foul weather mobility (to help with ageing parents) is going to cost say £150 in fuel and £70 in road tax. Sold.