Kia Spectra Vs. Honda Civic

A Group 5 Presentation

Team Members

Jose Perez-Organizer/Techie Meredith Mitchell-Summarizer/Techie Wai Chung Ching-

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

Excellent credit Clean driving record 1200 miles/month Cost of gas-$3/gal 5 Year Loan

Models

2005 Honda Civic Ex 4Dr Sedan

Manual 5 Sp Standard Package

2005 Kia Spectra Ex 4Dr Sedan

Manual 5 Sp Standard Package

Costs

Kia Sprectra MSRP

$14390 Insurance

$1418.75

Honda Civic MSRP

$17260 Insurance

$1756.91

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

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

Down Payment $0 $1500 $2500

APR %0 %4.9 %8.0

Salvage Value

Spectra Only 22% of MSRP

$3165.80

Civic 44% MSRP

$7594.40

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

At $2500 Down

APR Kia EUAC Civic EUAC

0.0 5545.37 5398.38

4.9 5853.39 5780.74

8.0 6060.41 6037.73

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

Down Payment Vs. EUAC

52005300540055005600570058005900600061006200

0 500 1000 1500 2000 2500 3000

Down Payment ($)

EU

AC

($)

0 APR Civic

0 APR KIA

4.9 APR Civic

4.9 APR Kia

8.0 APR Civic

8.0 APR Kia

More Results

At higher APR, EUAC became close, but Civic still lower

Higher APR higher EUAC (much more drastically)

Effect of APR on EUAC

APR Vs. EUAC

52005300540055005600570058005900600061006200

0 2 4 6 8 10

APR (%)

EUA

C ($

)

0 Down Civic

0 Down Kia

1500 Down Civic

1500 Down Kia

2500 Down Civic

2500 Down Kia

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?

Salvage Value (% of MSRP) Vs. EUAC

0

1000

2000

3000

4000

5000

6000

7000

0 10 20 30 40 50 60

% MSRP

EU

AC

($)

Honda

Kia

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…

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

Usually Labor Day, Memorial Day or July 4th

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

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

Warranty Information Civic-3 year power train warranty Spectra-5 year power train warranty

Our Personal Choices

Meredith-Honda Civic Higher MSRP is worth the safety rating

Jose

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