1. Kia Spectra Vs. Honda Civic A Group 5 Presentation

2. Team Members Jose Perez-Organizer/Techie Meredith Mitchell-Summarizer/Techie Wai Chung Ching-

3. 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.

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

5. Models 2005 Honda Civic Ex 4Dr Sedan Manual 5 Sp Standard Package 2005 Kia Spectra Ex 4Dr Sedan Manual 5 Sp Standard Package

6. Costs Kia Sprectra  MSRP $14390  Insurance $1418.75 Honda Civic  MSRP $17260  Insurance $1756.91

7. 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

8. 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

9. Financing Options Down Payment  $0  $1500  $2500 APR  %0  %4.9  %8.0

10. Salvage Value Spectra  Only 22% of MSRP $3165.80 Civic  44% MSRP $7594.40

11. 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%

12. EUAC at Diff. APR At $2500 Down APRKia EUACCivic EUAC 0.05545.375398.38 4.95853.395780.74 8.06060.416037.73

13. 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

14. Effect of Down Payment on EUAC

15. More Results At higher APR, EUAC became close, but Civic still lower Higher APR higher EUAC (much more drastically)

16. Effect of APR on EUAC

17. The Kia Spectra may be Cheaper, but the economically desirable option is the Honda Civic

18. What if Kia Resale=Honda Resale 5 Yrs in the Future?

19. 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.

20. 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

21. If you want a civic, wait until they offer special financing Usually Labor Day, Memorial Day or July 4th

22. 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

23. 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

24. And Finally Warranty Information  Civic-3 year power train warranty  Spectra-5 year power train warranty

25. Our Personal Choices Meredith-Honda Civic  Higher MSRP is worth the safety rating Jose

26. 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