Deception at the Dealership

Car salesmen aren't well known for their -- shall we say -- dedication to the truth. But you'd figure that a car salesman used as a source by National Public Radio might be a bit more reliable, right? Guess again.

I'm referring to a story I heard this morning. It made note of the dismal sales from Ford (NYSE:F) and GM (NYSE:GM) during September, noting that Honda (NYSE:HMC) and Toyota (NYSE:TM) don't seem to have to offer the same incentives to get buyers, especially on their more fuel efficient cars. (Daimler-Chrysler, (NYSE:DCX) for what it's worth, had a modest sales increase.)

Here's where the rubber meets the road. A Toyota sales manager (No conflict of interest there, right?) justified the recent, reported urge to switch to more fuel efficient cars by saying, "The amount of gas that they save might be the amount of your payment." NPR called this assertion a "bit of an overstatement." I'd have called it worse than that.

Let's do some math, shall we? Let's assume you back off your driving a little, and put in only 10,000 miles a year, or 833 miles per month. Let's also assume that you stick your current, big, paid-for SUV, which gets 15 miles per gallon, in the garage and toss the keys down a sewer grate. How much will buying and driving a Prius or a Corolla save you each month? How's nothing sound to you? How about worse than nothing?

Even if you put 25% down, even with gas at $3 a gallon, you will spend much more on the new payment than you will save at the pump. This new, fuel efficient car will actually increase your monthly car expenditures anywhere from $130 to $230.

Of course, it is possible to make this switch and save money. It starts with a down payment of around $11,000 on a Corolla, so if you ditch your SUV for that amount, put it all down, you'll come out a whopping $6.53 per month ahead.

Of course, trade in your SUV for a Corolla, and you might find that the extra six bucks a month aren't worth the frustration come blizzarding time, or when you try and shove kids, dogs, and luggage inside for that family trip. And it's worth noting that it's very difficult to make the math work at all for a Prius. They simply cost too much more for the modest mileage increase they provide.

I'm not exactly a fan of oversized gas guzzlers: I ride a bike or take the train, where I can beguile everyone with my hemp-short- and patchouli-fueled tree huggery. But I'm even more opposed to bad math put forward by self-serving salespeople.

The current gas woes definitely have people worried about their wallets. That's a reasonable response. But before you run out to the car dealership to try and ease your mind, make sure you actually do the math. It's possible that you could come out ahead in the end, but it's not a sure thing. If you don't bring along your calculator and take a skeptical view of what the salesmen say, you're likely to end up even poorer than before.

Related Foolishness:

• Review Ford's bizarre optimism.
• Summer employee-price promotions are just the latest, scariest part of the Detroit joy ride. Was Ford late to the party?
• Review the carmaking Yin and Yang.

Seth Jayson is a big fan of financial literacy. At the time of publication, he had no positions in any company mentioned here. View his stock holdings and Fool profile here. Fool rules are here.