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Published on February 5, 2008

Author: Melissa1

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Kia Spectra Vs. Honda Civic:  Kia Spectra Vs. Honda Civic A Group 5 Presentation Team Members:  Team Members Jose Perez-Organizer/Techie Meredith Mitchell-Summarizer/Techie Wai Chung Ching- Scenario:  Scenario An economically challenged engineering student at Cal Poly Pomona, a commuter school, is searching to buy a reliable, cool looking car that fits in his/her budget and gets excellent gas mileage. Assumptions:  Assumptions Excellent credit Clean driving record 1200 miles/month Cost of gas-$3/gal 5 Year Loan Models:  Models 2005 Honda Civic Ex 4Dr Sedan Manual 5 Sp Standard Package 2005 Kia Spectra Ex 4Dr Sedan Manual 5 Sp Standard Package Costs:  Costs Kia Sprectra MSRP $14390 Insurance $1418.75 Honda Civic MSRP $17260 Insurance $1756.91 Gas Mileage:  Gas Mileage Spectra Highway-32 City-24 Cost 14400 mi/yr $3/gal =$1542.86/yr Civic Highway-37 City-32 Cost 14400 mi/yr $3/gal =$1234.29/yr Repair Costs:  Repair Costs Kia Spectra Fuel Pump $145.99+89.99 L Water Pump $51.99+89.00 L Brake Calipers $64.99+89.99 L Honda Civic Fuel Pump $214.99+69.99 L Water Pump $82.99+184.00 L Brake Calipers $103.99+115.00 L Financing Options:  Financing Options Down Payment $0 $1500 $2500 APR %0 %4.9 %8.0 Salvage Value:  Salvage Value Spectra Only 22% of MSRP $3165.80 Civic 44% MSRP $7594.40 Economic Analysis:  Economic Analysis Used EUAC Estimated Uniform Annual Cost Lower the EUAC the better Used Excel Found net present value using NPV Function Used –PMT Function for EUAC Assumed MARR of 6% EUAC at Diff. APR:  EUAC at Diff. APR Results/Sensitivity Analysis:  Results/Sensitivity Analysis Honda Civic had lower EUAC than Spectra for each APR and Down Payment Higher down payment, higher EUAC (slightly) Down payment didn’t effect difference in EUAC by much Effect of Down Payment on EUAC:  Effect of Down Payment on EUAC More Results:  More Results At higher APR, EUAC became close, but Civic still lower Higher APR higher EUAC (much more drastically) Effect of APR on EUAC:  Effect of APR on EUAC The Kia Spectra may be Cheaper, but the economically desirable option is the :  The Kia Spectra may be Cheaper, but the economically desirable option is the Honda Civic What if Kia Resale=Honda Resale 5 Yrs in the Future?:  What if Kia Resale=Honda Resale 5 Yrs in the Future? When salvage values are adjusted..:  When salvage values are adjusted.. At same % MSRP, Kia becomes economically desireable option-though not by much. As of now, Kia’s have very poor resale value Honda’s are in the top 10 list of cars that keep their value over time. One thing to keep in mind…:  One thing to keep in mind… Kia had 0 down 0 APR financing available Honda didn’t At 0 down 0 monthly payment, Kia EUAC=$5451.87 At 4.9% and 2500 down, Honda EUAC=$5780.74 If you want a civic, wait until they offer special financing:  If you want a civic, wait until they offer special financing Usually Labor Day, Memorial Day or July 4th But….Economics Isn’t Everything:  But….Economics Isn’t Everything Upgrades Available Body Kits? Overall Look and Feel Both look similar on outside Kia has cheap interior See carpet edges Knobs, buttons cheap plastic More to Consider:  More to Consider Government Safety Ratings Civic 5 star Frontal, 4 star rollover and side ratings Spectra 4 star Frontal, 4 star side (3 for rear seat), rollover TBD And Finally:  And Finally Warranty Information Civic-3 year power train warranty Spectra-5 year power train warranty Our Personal Choices:  Our Personal Choices Meredith-Honda Civic Higher MSRP is worth the safety rating Jose Sources:  Sources www.kia.com www.rockhonda.com www.insweb.com www.safercar.gov Homework 6 Example Dr. Rosenkrantz, Fall 2004, Egr 403 Kia of El Monte, Ca Norm Reeves Honda, Norwalk, Ca

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