Kia Spectra Vs. Honda Civic

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Kia Spectra Vs. Honda Civic

• A Group 5 Presentation

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Team Members

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

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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.

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Assumptions

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

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Models

• 2005 Honda Civic Ex 4Dr Sedan
• Manual 5 Sp
• Standard Package

• 2005 Kia Spectra Ex 4Dr Sedan
• Manual 5 Sp
• Standard Package

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Costs

• Kia Sprectra
• MSRP
• 14390
• Insurance
• 1418.75

• Honda Civic
• MSRP
• 17260
• Insurance
• 1756.91

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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

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Repair Costs

• Kia Spectra
• Fuel Pump
• 145.9989.99 L
• Water Pump
• 51.9989.00 L
• Brake Calipers
• 64.9989.99 L

• Honda Civic
• Fuel Pump
• 214.9969.99 L
• Water Pump
• 82.99184.00 L
• Brake Calipers
• 103.99115.00 L

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Financing Options

• Down Payment
• 0
• 1500
• 2500

• APR
• 0
• 4.9
• 8.0

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Salvage Value

• Spectra
• Only 22 of MSRP
• 3165.80

• Civic
• 44 MSRP
• 7594.40

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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

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EUAC at Diff. APR
At 2500 Down At 2500 Down 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
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Results/Sensitivity Analysis

• Honda Civic had lower EUAC than Spectra for each
  APR and Down Payment
• Higher down payment, higher EUAC (slightly)
• Down payment didnt effect difference in EUAC by
  much

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Effect of Down Payment on EUAC
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More Results

• At higher APR, EUAC became close, but Civic still
  lower
• Higher APR higher EUAC (much more drastically)

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Effect of APR on EUAC
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The Kia Spectra may be Cheaper, but the
economically desirable option is the

• Honda Civic

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What if Kia ResaleHonda Resale 5 Yrs in the
Future?
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When salvage values are adjusted..

• At same MSRP, Kia becomes economically
  desireable option-though not by much.
• As of now, Kias have very poor resale value
• Hondas are in the top 10 list of cars that keep
  their value over time.

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One thing to keep in mind

• Kia had 0 down 0 APR financing available
• Honda didnt
• At 0 down 0 monthly payment, Kia EUAC5451.87
• At 4.9 and 2500 down, Honda EUAC5780.74

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If you want a civic, wait until they offer
special financing

• Usually Labor Day, Memorial Day or July 4th

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But.Economics Isnt 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

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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

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And Finally

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

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Our Personal Choices

• Meredith-Honda Civic
• Higher MSRP is worth the safety rating
• Jose

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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