Sedan Vs. SUV: Why Now Is the Time to Buy a Sedan, Not an SUV

Look, I get it. The Joneses next door have one, and so do the Smiths across the street. The Patels on the other side of the cul-de-sac have two, and the Yamaguchis got a new one after they retired, sold the minivan and moved to coastal Florida. Everyone wants an SUV these days, despite the fact that almost nobody actually needs an SUV. People like the space, they like sitting up high for better visibility (though when everyone has tall-riding wagon SUVs, is anyone really seeing better?), they like the passenger comfort. They don’t like that it’s sometimes harder to get in and out, the generally worse fuel economy and the typically larger footprint when trying to park in a crowded shopping center. SUVs and crossovers don’t even ride or handle as well as sedans or hatchbacks.

None of these arguments has done anything to dissuade American buyers that an SUV is what they want and need — examples keep multiplying as more people eschew traditional cars for boxier conveyances. 

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But in what feels like the blink of an eye, times have changed. It’s time to consider the sedan-versus-SUV question, and not for the above reasons, which have largely fallen on deaf ears. It’s time to do it because it’s the cost-effective thing to do, and with all economic indicators pointing to hard times ahead, cost and affordability are likely to be big issues in the next few years.

Sedan Vs. SUV

There’s a Definite Price Difference

The trend is a nefarious one — an automaker will pull a reasonably priced sedan from its lineup, citing low demand, and replace it with a more expensive SUV. They’re following the market demand, yes, but let’s look more closely at a few examples.

The bottom end of the market is seeing the cheap, entry-level sedans being replaced by not-so-cheap entry-level front-wheel-drive SUVs. The Nissan Kicks is a subcompact entry-level SUV based on the same platform as the subcompact entry-level Versa sedan — same engine, same transmission, both front-wheel-drive only. But the Kicks is significantly more expensive: The starting price for a Versa with an automatic transmission is $17,325 (and it’s even cheaper if you go for a manual transmission), while the starting price for a Kicks is $19,965. At Hyundai, the Accent sedan is still available (for now), but the equivalent crossover, the new Venue, is some $2,000 more expensive. Ford killed the 2019 Fiesta subcompact and replaced it with the 2020 EcoSport SUV, making the least expensive model-year 2020 Ford a $21,000-plus SUV, some $6,000 more than the previously least expensive sedan.

Ford is about to kill the Fusion sedan, too, saying nobody wants it. Instead, the automaker points people to the more car-shaped 2020 Escape SUV as the alternative, but the starting price for one is $1,765 more than the least expensive Fusion. It’s the same over at GM, where the Chevrolet Malibu is on its way out and the brand would like you to have an Equinox instead … for $2,025 more. A Toyota Corolla starts at $20,555 for a base model; the cheapest RAV4 compact SUV starts at a whopping $27,070. Think that’s not a fair comparison? The cheapest mid-size Toyota Camry sedan, with passenger volume 1 cubic foot greater than the RAV4’s by Toyota’s measurements, is $25,380 — still almost $1,700 less than the least expensive RAV4. 

The Financing Farce

But wait, given the awesome financing deals currently being offered by the auto industry, with some automakers pushing loans up to 84 months with 0% interest, the monthly payment differences between an SUV and sedan aren’t really that big, right?

True, the payments may still appear reasonable, but look how long you’re paying for that vehicle — 84 months is seven years, meaning you’ll still be paying off that new SUV in 2027, long after the warranty has expired and repair costs have increased. And even if you plan to get rid of the thing in four years, you’ll still be significantly underwater in your payments having paid only for interest, not principal; the vehicle almost certainly won’t be worth what you owe on it. Anything you owe over what it’s worth will either have to be paid off out of pocket, or rolled into the borrowed amount for a new car, so eventually you will be paying interest on that 0% loan unless you keep the car for the full term or pay it off early. On a more expensive vehicle like an SUV, that expense just snowballs forward, even with a current 0% loan out to the end of the decade.

Gas Mileage Groan

While progress has been made on improving the gas mileage of SUVs, they generally don’t get the same kind of efficiency as their sedan counterparts (with a few notable exceptions, such as the outgoing four-cylinder, six-speed-equipped Ford Fusion versus the incoming new three-cylinder, eight-speed Escape). The ones that get better mileage than their sedan cousins tend to be hybrids or plug-in hybrids, and then you’re looking at a particularly expensive proposition. With gasoline at record low prices, however, talk of gas mileage might seem like an irrelevant discussion — but low prices aren’t going to last forever, and as supply comes under control, prices are likely to resume their upward climb. (This is more of a problem if you sign on for one of the long loans mentioned above.)

Some people truly can justify an SUV — they have a lot of stuff to haul around, a big family or live in areas with inclement weather for which all-wheel drive is a boon. But consider that for decades, families made do with less. For some applications, winter tires can be as helpful as all-wheel drive in bad weather. You can cram a lot of stuff into a mid-size sedan, or even one of the latest compact models that have surprising amounts of rear legroom.

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So, what do we recommend you consider in your sedan versus SUV dilemma? A few tips to help you on your journey:

• Do a solid assessment of what you really need in a vehicle. Are you looking to buy an SUV because you absolutely have to have all that room, or is something smaller, stylish and less expensive suitable for your use? “I might tow something once a year” or “I want something ready for the snow” aren’t really good reasons to spend the extra cash.
• Look for sedans that have been around awhile and are soon to be discontinued. The Fusion is an excellent choice, with its modern multimedia system, turbocharged engines, even available all-wheel-drive and hybrid models. The Malibu is also not a bad option, with many of the same qualities as the Fusion but no AWD option.
• Go used over new if you really want to save some money. A 2-year-old, off-lease pre-owned sedan is an even bigger bargain compared with an SUV, as the initial depreciation that happens when driving off a dealer lot with a new car has already occurred.
• Think twice about the long-term, no-interest loans. The shortest term you can afford is the one you should be picking (as long as the interest rate isn’t crazy). Don’t be sucked in by what appear to be easy payments — you should focus on the overall cost of the vehicle and avoid rolling over new debt into even greater future debt.

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