NEW YORK – The July 4th weekend is upon us and American automakers are waving a host of come-ons to lure you into their showrooms. But if it's a gas-thirsty SUV they've got you looking at, think twice and do some math before buying.
The steep discounts offered by GM (GM), Ford (F) and (DCX) Chrysler can't make up for the cost of fueling these behemoths and the depreciation they experience in their first five years.
The incentives come in the form of low-or-no-cost financing, free gasoline or cash rebates.
Ford is advertising 0 percent financing on 2006 models and $1,000 worth of gas until the end of the year. Chrysler ads tout 0 percent financing or a $4,000 rebate on models like Town & Country, PT Cruiser and Pacifica. GM, among other deals, offers 0 percent financing for 6 years on its GMC models.
But a cost analysis done by Consumer Reports shows that smaller import SUVS such as the Toyota Rav-4, the Honda Pilot and the Acura TL will save you money over five years by getting better mileage and holding their value longer, says Rob Gentile, the magazine's director of auto-price services.
Gentile calculated the total incentives being offered — not just the ones being advertised to customers but the extras that the manufacturers offer dealers as well — on models such as the Chevrolet Tahoe, Ford Expedition, Mercury Grand Marquis and Cadillac Escalade. He came up with a price you could reasonably expect to pay if you cut a deal right now, some nearly a third below the sticker price.
He also tallied what an owner could expect to spend in fuel and the value of depreciation, a factor that is especially important today because large vehicles with poor gas mileage are going out of fashion, making them harder to sell — a trend which could accelerate if gas prices rise.
Most incentives didn't pay for themselves. The five-year cost of fuel and depreciation for the Ford Explorer was nearly $20,000, for the Mercury Mountaineer $19,000 and for the Escalade $17,000. Even sedans fared poorly. The Lincoln Town Car cost $22,000 over five years.
The Japanese models cost much less: $14,000 for the Acura TL, $11,000 for the Pilot and merely $5,500 for the Rav-4. And Honda, Acura and Toyota must know what they have: the incentives they offer on those models don't go above $1,000.
Still, those numbers don't mean you should abandon American brands. The Mercury Grand Marquis, a sedan, and Chevrolet Tahoe fared better than others in the comparison.
Also, the three Japanese SUVs, all recommended by the magazine, are smaller and less powerful than most of the U.S. models. If you need the roominess or towing capacity of an Expedition, now may be a good time to buy. And the Ford, GM and Chrysler incentives apply to smaller models, with better mileage and resale value, as well.
Bottom line: have an idea of what you're looking for before you hit the showrooms and compare, compare, compare.
Copyright (c) 2006 MarketWatch, Inc.