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Bankrate's 2007 New Car Guide
The auto world's in a period of great change. How will it affect you?
Cost-to-drive gets harder to figure

The quandary that new car buyers find themselves in this summer is that while it makes sense to take fuel economy into account, two moves by the federal government have made it more difficult than ever to calculate cost effectiveness.

New factors to consider:
1. The EPA changed the way it comes up with the mileage ratings on new cars -- lowering the numbers substantially.
2. Tax credits for the most popular hybrids have vanished, erasing a good portion of the anticipated savings.

First, the U.S. Environmental Protection Agency changed the test procedures it uses to determine the city-highway fuel mileage numbers that are affixed to all new-car price stickers -- meaning 2008-model vehicles will have lower ratings than the identical 2007 model. The big losers in the EPA recalculation of fuel mileage are the gas-electric hybrids, which now carry EPA ratings up to 30 percent lower than last year. Consider the Toyota Prius, which has been the darling of the fuel-efficient fleet. Under the old EPA system, it was rated at 60 mpg in city driving, 51 mpg highway and 55 mpg in combined city-highway. The new system says the Prius is likely to get 48 in city driving (20 percent less), 45 mpg on the highway (12 percent less) and an average 46 mpg (16 percent less) in combined driving.

The good news is that the new ratings more accurately reflect what drivers report in real-world conditions and that the hybrids are still usually the fuel mileage champs in various categories, since the new EPA results also lowered the mileage numbers for conventional gas-only vehicles.

Tax credits
But for buyers, the hybrid equation is further complicated by the disappearing tax credits available. Because Congress wrote the tax legislation to benefit Detroit-based manufacturers -- who have been late to the hybrid parade -- tax credits for imports like the Prius and the Honda Civic Hybrid evaporated as their sales ramped up. Toyota has responded to the lack of tax credits on the Prius with cash rebates to keep up sales.

The big losers in the EPA recalculation of fuel mileage are the gas-electric hybrids, which now carry ratings up to 30 percent lower than last year.

One car, the Honda Accord Hybrid, will exit the market because buyers have rejected the idea of paying more for a car that uses hybrid technology to boost horsepower while only moderately reigning in fuel consumption.

Consumers who haven't shopped for new cars in the past few years will be confronted with some new, more fuel-efficient choices, from subcompact sedans to an expanding array of sport utility vehicles that are based on engine and chassis combinations that are more like sedans.

Cars like the Honda Fit, Toyota Yaris and Nissan Versa are testing consumer interest in buying cars that are half the size of the SUVs that have been the favorites of drivers in past years. While sales of these cars have been encouraging, there's no indication that buyers -- even with gas prices around $3 a gallon -- are rushing to downsize.

SUVs remain the vehicles of choice for many buyers, who feel that the added cargo capacity and passenger room of an SUV best suits their lifestyles.

Crossover SUVs like the Ford Edge, Chevrolet Equinox and Mazda CX join longstanding crossovers like the Toyota Highlander and the Honda Pilot. These vehicles offer interior room and styling that's similar to traditional SUVs like the Ford Explorer and the Chevrolet Tahoe, but with better fuel mileage and often a more comfortable ride. The compromise is that crossover SUVs usually sacrifice some off-road and towing capabilities.

-- Posted: Aug. 2, 2007
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