Part 1 of this series focused on how I got around to accepting the idea that we need a new family car. I also addressed the question, how much car we could comfortably afford? In this post I will address several of additional questions as we narrow down our search for our new family vehicle.

High end Economy SUV vs. Luxury SUV?

Let me begin by noting that I know as much about cars as Mrs. AVI knows about programming, which is to say, not much. So to begin to attempt an answer to above question, I reached out to two people who I know are well-versed in all things cars. The question I asked them was:

Given the choice between a higher trim economy SUV vs. a base-class luxury SUV,  which would they prefer and why?

The answer unequivocally was, base-class luxury SUV. As to why, below is the gist of their reasoning,

• automakers give greater attention to all the minute details such as suspension components, interiors etc… resulting in a much higher ride quality for a luxury vehicle
• luxury vehicles offer higher levels of safety and reliability
• all modern tech features come standard in any new luxury vehicle.

And finally, one friend noted, why not live it up a bit!

With this prior, I did my own investigations into the question of economy vs luxury. Below, I summarize my findings and conclusion.

• Price: A base class luxury vehicle when purchased new would cost anywhere from ~15 % to 30 % more. See below for example,
  • 2019 Honda-CRV Touring AWD, listed at MSRP of about $35,195 vs. 2019 Acura-RDX base trim, listed around $40,595
  • 2019 Honda-CRV Touring AWD, listed at MSRP of about $35,195 vs. 2019 Audi Q5 premium, listed around $45,894.

To me, the price differential between the high-end economy vs luxury does not seem to be a deal-breaker.

• Ride Quality: This is an area where I in general tend to struggle. In order better understand what it is about ride-quality that every-one seems to talk about, I decided to test drive the 3 above mentioned vehicles back-to-back. The thinking was that, by driving these vehicles consecutively, I will have enough of a  muscle-memory retention for my brain to figure out the difference, if any, in the ride quality of economy vs. luxury vehicles. To my surprise, indeed, I noticed a difference. Especially with the Audi Q5. It was noticeably smooth to ride and was just a pleasure to drive. The difference in ride quality between Acura and Honda was not as obvious, though still noticeable.

To me, Audi Q5 offers significantly better ride quality than the high-end economy vehicle such as the CR-V. Acura seems like a reasonable compromise between Audi and CR-V and is priced as such as well.

• Safety: It’s a wash. All the 3 vehicles that I tested score high-marks on safety.
• Annual Cost of maintenance:  It gets quite interesting here. It seems all European luxury cars cost a fortune to maintain.  yourMechanic.com has produced a nice summary table comparing the annual cost of maintenance for various car models. Of the top 5-most expensive to maintain, 4 are European. In general though, luxury cars cost more to keep and drive.

My excitement for European luxury cars is some what dampened with this knowledge.

• Fuel efficiency:  Cost of fuel for luxury vehicles is in general higher. With low mileage per gallon to requiring premium gas, the numbers can soon add up. With Tesla pioneering the electric-luxury segment, above may not necessarily be true.

For AVI family, fuel cost is less of a concern. The new vehicle for AVI family is primarily a “pleasure” vehicle and not a daily work-commute vehicle.

In conclusion, considering all the listed factors, we are inclined to dig-further into the Acura-RDX. This vehicle offers a reasonable compromise between price and luxury and is within out budget for a new vehicle.

New vs Used?

As stated above, as of this writing, we are very much inclined to dig further into the options to purchase Acura-RDX. As such, Acura came out with the latest RDX model in 2019, which is a  complete makeover over the model of previous years.

This autotrader.com article offers a nice summary comparing the 2019 Acura RDX to 2018 Acura RDX and I am convinced that if we are going to purchase Acura RDX, it makes sense to go with the latest model, which means pursuing the path of new vehicle purchase.

Last time we were in the car market, I did an extensive investigation into the question of used vs. new. This time round, I feel the decision is simple and if we are to purchase Acura-RDX, we will most likely purchase the new 2019 (or 2020) model.

Cash vs Financing vs Lease?

Now this is an interesting question and worth spending some time on. For the purchase of my last car, I pursued the financing path, primarily because of the Toyota Incentive for 60 months 0 % loan.

If I choose to go with new RDX, at present time, there does not seem to be good financing deals available. However,  Acura is running a specials on leasing options for a new RDX.

From Acura’s website, the lease deal is: $409 per month, for a 36 month lease, which includes $2999 as down payment. 

Lets get into the details to see what this means. I am particularly interested in the lease loan interest rate that the leasing company will charge to “rent” the vehicle for 3 years.

Again, from the website,  the above quote is based on net capitalized cost, $33,635.60 for a vehicle listed at MSRP of $38,595. The net-capitalization cost (this is the negotiated purchase price of the car in a regular cash/finance transaction), includes the acquisition fees ($595), which is a non-negotiable, pure profit for the leasing company. The price of the vehicle at lease end, also referred to as the residual, is $23,452.95.

We can further breakdown the numbers using the following formula to break down the lease payment per month,

[math] $\text{ Depreciation + Interest + Tax = Lease}$ \\

$\text{Depreciation = (Capitalization Cost – Residual)/ Lease Term}$ \\

${\text{Interest = (Capitalization Cost + Residual)}$ $\times$ $\text{Lease loan Interest Rate}/2400$  \\

$\text{Tax = (Depreciation + Interest) }\times \text{Sales Tax}$

[/math]

Assuming local sales tax to be 10 %, plugging the numbers from Acura lease deal,

[math]

$\text{ Depreciation} = \$282.85 $\\

$\text{ Lease loan Interest Rate }= 3.74 \%$

[/math]

With car loan rates hovering between 5 and 6 %, the lease loan interest rate of 3.74 % does sound attractive. This deal looks even more attractive when one could expect about 7 % ROI on AVI-portfolio investment.

Conclusion: It looks like we are settling on leasing Acura RDX-2019 as our new vehicle.

In part 3 (and the final part) of my new-car blog-series, I will share my experience negotiating purchase price (based on some tips I have received from friends as well as my own research) and hopefully some pictures of the AVI-family car.

Video/Book/Article/Audio for the Week

For this week, I want to highlight the second-season of Netflix documentary series, Rotten, in particular, episode 3 titled Troubled Water. Some factoids are simply staggering, when we think of water as a public resource:

• The water industry is bigger than movie industry.
• For the price of a single bottle of purified water, costing about a $1, one could purchase 8 years worth of tap water.
•  3 major players in the bottling industry are Nestle, Coke and Pespi.

I would highly encourage watching this episode of Rotten if not the entire series.