Motor scooters have experienced a surge in popularity since the high gas prices of 2008. During the travel peaks of that long, hot summer, record costs were seen in some areas. A gallon of gas topped $4 and consumers scrambled to locate any cost savings that could be had for reducing their carbon footprint and lowering the percentage of their budget that was rerouted to pay for gas. Oil production slowed and families felt the pressure to reign in budgets as gas prices climbed. For many families, purchasing a new Vespa or Honda scooter was seen as a smart investment that allowed for local commuting while offering substantial savings on gas. For busy urban areas such as New York, Chicago or Los Angeles buying a car is a difficult purchase to justify in even the best of circumstances. This visceral reaction made sense to many peoplein the face of rising gas prices and sales of scooters exploded. While common sense seems to indicate this is a good move, once you do the math the wisdom of this choice doesn’t seem to bear out.
Consider for example, Vespa’s own FAQ that addresses the average MPG of the scooters sold under the brand,
“…we have a variety of bikes to fit a variety of needs. This is true as well for gas mileage: some of our scooters will get 90 mpg while the fastest, heaviest scooters we sell will still achieve around 60 mpg.”
Adding It All Up
Gas is not expected to retain historic highs during 2016, but it will no doubt increase in price during peak travel times such as holidays and during the summer. While low prices hovering around $2 are currently being enjoyed, projection indicate that creeping costs will be experienced for the first half of 2016 and average prices will continue to rise, especially in the face of increased instability in the Middle East and ongoing opposition to fracking and other alternative energy recovery methods. An average scooter offers about 80 miles per gallon compared to 20-30 miles per gallon on a standard automobile. Do consider if you need to purchase a heavy-duty model for a challenging commute, your costs will be even greater due to the reduced MPG. With an average cost of gas at $3 per gallon (assuming peak pricing) you can expect your scooter to incur a cost of about 4 cents per gallon versus around 12 cents per gallon for a fuel efficient car. With these numbers it seems to be nearly a no-brainer that a motor scooter will save significant gas money and improve a family’s budget but there are many other considerations to take into account before rushing out to purchase a motor scooter.
Let’s consider the break-even point of a new Vespa scooter, generalizing the MSRP, tax, title, helmet and license at an average of $5,000. With a savings of 8 cents per gallon, we quickly realize that the break-even point of the scooter exceeds 60,000 miles. This well exceeds the life-expectancy of an average motor scooter.
Even Vespa’s own website, a brand often proclaimed to be some of the highest-quality, longest-living scooters states,
“Informally, we tend to expect the most of the bikes we sell to make it 50,000 miles.”
The return on investment of a $5,000 scooter substantially changes when you consider that the odds you can make it to the break-even point with even a well-kept, high-end model are small. Even with the best care and upkeep, other factors can cause wear and tear on your scooter. Weather and poorly maintained roads can age a scooter and even with regular care, few scooters can compare to the life expectancy of a normal vehicle, or even a motorcycle. Expecting a scooter to compare with purchasing a vehicle just doesn’t add up, but there are still ways to save money when buying a scooter.
More and more scooter shoppers are turning to brands that are built in China and imported to the United States. While these brands are substantially less expensive, they do require more leg-work to get up and running. These scooters are shipped unassembled and will require some technical know-how. If you aren’t handy or don’t have the basic knowledge of auto mechanics, this might not be the option for you. If you have to pay someone to assemble the scooter for you, this can cut significantly into your cost-savings, so be certain you have a plan for any snags you may encounter.
Generally for a $1,500 China branded scooter, you will need to drive 18,750 miles to reach the break-even point. This is much more reasonable in comparison to the realistic life expectancy of a normal scooter. Chinese manufacturing has improved over the past decade and these scooters often outnumber brand name scooters in some cities and enjoy a loyal following for budget-minded individuals.
There is no doubt you can save thousands by looking overseas for a scooter, but will this purchase still make financial sense for your family once you consider other costs?
Few individual have $5,000 nestled in a bank account to purchase a scooter outright. Most people choose to finance a scooter, which can add 5-10% a year to the cost of the scooter. Additionally, you must consider that oftentimes the person financing a scooter is generally a younger person, such as a teenager or young adult, who may not have established credit and will not enjoy the perks of a low interest rate. For young people, interest rates up to 20% can add hundreds to the cost of a scooter virtually eliminating any savings. For those who do have $5,000 saved and enjoy the option of purchasing a scooter outright, it pays to consider that by purchasing the lesser expensive China branded scooter, the remaining $3,500 can be saved and invested to provide a return, such as the average 7-10% provided by investing in the stock market.
Few individuals would need to finance the purchase of a China branded scooter. This amount can often be saved from part-time employment, a tax return, as a graduation or birthday gift or even with excess financial aid money for college students. Even with the additional costs of financing, a China branded scooter is substantially less expensive and provides a better return on investment than a standard brand name scooter.
Sunk Costs and Depreciation
While considering historical returns on investment, the concept of depreciation cannot be ignored. There is an old joke about automobiles losing half their value the moment you drive them off the dealership lot, but a similar rule can be applied to scooters. China branded scooters are often referred to as “disposable” and few owners place them up for resale. They are usually driven until the cost of repair exceeds the costs to purchase a new scooter. Few owners expect to recoup any value off of their purchase through resale. However, when comparing this to brand-name scooters such as Vespa, the sunk costs are apparent and quickly exceed the entire cost of a China branded scooter.
Consider that on the day you purchase a Honda or Vespa scooter, nearly $1,000 of the costs are tied up in tax, title, license, accessory costs (such as helmets) and other dealer fees. This is a sunk cost and cannot be recouped. Even if you could convince someone to purchase your used scooter for $4,000 (about the MSRP), you have already lost nearly the entire cost of the China branded scooter to depreciation. It is difficult to justify this type of loss, especially for a struggling family or young individual seeking to save money on gas and be budget-minded in their purchasing decisions.
When To Buy Brand Name
You may be deciding at this point that it just does not make sense to purchase a brand name scooter when there are many other affordable options out there. Any purchase decision is a personal one and buying a beautiful new Honda scooter can make sense for some people. Vespa and Honda scooters are enjoying a revival as collector’s items and many people enjoy the name recognition and cultural acclaim of owing one of these scooters, especially in areas where brand recognition is high, such as college campuses. Some people find that a Honda or Vespa scooter offers a more comfortable ride and greater amenities that the more “bare-bones” China branded scooters. However, for starving artists, budget-minded families and college students these brand scooters just do not make financial sense when your aim is to save gas money. For these individuals, purchasing a China branded scooter online, sacrificing some amenities, and investing a little more time provides significant cost savings.
Like any online purchase, it pays to invest time researching the product and comparing your needs to the models available. Do not automatically go for the lowest price or most “bells and whistles”. Many people have suffered “buyer’s remorse” from jumping on sites such as Ebay and buying the cheapest scooter they can find. They quickly realize not all China branded scooters are comparable, well-made or even can be serviced by local technicians. A plethora of reviews of missing parts, premature scooter failure and lack of seller support exists and purchasing blindly can lead to regrets.
Do your research and compare brands and equipment, making the right choice for you and your family, and one that will pay off down the road.