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2010 Honda Insight gets priced

Honda's Insight has been making the rounds here at DailyTech for quite some time. The vehicle first made an appearance as a concept car at the 2008 Paris Auto Show and was revealed in production form at the Detroit Auto Show.

Ever since the vehicle was first announced, Honda batted around the idea of releasing the vehicle in the U.S. with a price tag below $19,000. Today, however, Honda announced the official starting price of the Insight and it will actually be priced just below $20,000.

The 2010 Honda Insight LX will have a base price of $19,800 -- this compares to a $22,000 base price for the standard 2009 Toyota Prius. The next trim level is the Insight EX which will be priced at $21,300. Those that wish to have integrated GPS will have to part with $23,100.

The Honda Insight uses a 1.3-liter four-cylinder engine paired with the Integrated Motor Assist (IMA) hybrid system. The vehicle is EPA rated at 40 MPG in the city and 43 MPG on the highway.

The 2010 Honda Insight will face stiff competition from Toyota's third generation Prius. The 2010 Prius will launch later this year and will have an EPA combined rating of 50 MPG.

It is not known if Toyota will lower the price of entry of the new Prius to combat the Insight in the U.S. It's possible that Toyota may take a page from its Japanese strategy and offer the current Prius at a lower price and maintain the 2010 model as a "premium" offering.



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RE: Cool
By bankerdude on 3/11/2009 11:25:54 AM , Rating: 2
quote:
If I had more free time I could do an NPV calculation on both.

Ok, I'll take a crack at it. Based upon your calculations of annual costs for each vehicle plus the assumptions posted earlier in the thread of a six year loan at 7.5% (assuming no money down for simplicity) it looks like you will be paying an additional premium of $6,202.50 over the initial cost differential of $16,200 between the two vehicles (assuming the $7,500 tax credit on the Volt).

Here's my calculations:
Finance the Civic - $16,300 @ 7.5% for 72 months = $281.83/mo. This ends up costing $3,991.76 in interest over the life of the loan.
Finance the Volt - $32,500 @ 7.5% for 72 months = $561.93/mo. This ends up costing $7,958.96 in interest over the life of the loan.
The interest savings alone therefore save you (7958.96-3991.76)= $3,967.20.

In addition, you will also be saving money on your monthly payment, to the tune of $280.10/month (561.93-281.83). If you assume this equal stream of 72 monthly payments of $280.10 are invested in a money market account at a constant interest rate of 3% per year, the NPV of that stream = $18,435.30. The NPV calculation is as follows: C/i * [1-{1/(1+i)^n}] or in our example 280.10/.0025 * [1-{1/(1+.0025)^72}].

So, if the NPV of the cash flow stream is $18,435.30; plus the interest savings of $3,967.20; that equals $22,402.50 total additional cost of buying Volt, or a premium of $6,202.50 (22402.50-16200.00) over just the initial purchase price of the vehicles.

Adding the additional cost premium of $6,202.50 to your 10 year cost analysis example equals another $620.25 per year of cost savings necessary just to break even.


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