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IntelliChoice Value Rating
The chart above shows the purchase price versus ownership cost for each car from a specific vehicle class. The cars with better than average ownership cost/purchase price correlations are the best values, and these best value cars are represented by the dots below the curve. (i.e. the cars that have a lower ownership cost compared to its purchase price.) Those cars, which are worse than average or poor values, appear above the curve.
One way to view the graph is to draw a vertical line through any purchase price. You may see several dots that fall on this line - each of which is a car with a similar purchase price. However, notice the difference in ownership costs of each car represented by the vertical position of the dot. Two cars with the same purchase price can have thousands of dollars difference in ownership costs. This is what separates "good value" cars from "poor value" cars.
What is a good car value?
A "good car value" is one whose cost to own and operate is less than expected. The lower the cost to own and operate a car compared to what is expected, the better the value of that car.
But how do we know a car's "expected cost"?
For each car in the class, IntelliChoice plots the car's purchase price against the total five-year cost to own and operate it as determined by IntelliChoice research. Each dot on the above chart represents a specific car. Generally, we find that as the purchase price of the car increases, the cost to own and operate that car increases. This is why the dots on the graph tend to rise upward and to the right. This phenomenon also makes intuitive sense - as the purchase price rises, financing costs tend to rise, as do insurance, depreciation, taxes, and most other car ownership costs.
This is an important concept. It's normal for car ownership costs to rise as purchase price rises. Therefore, we can't just establish one "average" ownership cost number for each class, since cars in the class have different purchase prices. (This is why the "Relative" shown on each chart is different for cars in the same car class.)
Using statistical techniques, IntelliChoice "connects the dots" to form a curve that defines, for this car class, the relationship between the car's purchase price and car's ownership costs. This curve is our "expected cost" curve. The curve defines, for any car in the class, the five-year ownership cost that we would expect to see at each possible purchase price. If every car in the class were an average value, then all the dots would fall exactly on the curve. However, it's rare that any dot is exactly on the curve. Some dots are a little higher or lower, and some are a lot higher or lower. The dots that are a little lower are better than average car values, while the dots that are a lot lower are excellent car values (A dot that is a lot lower than the curve has ownership costs much lower than expected for a car of its purchase price). Conversely, a dot a little higher than the curve is a poorer than average car value, while a dot that is much higher than the curve is a poor car value.
Value is a relative term, not an absolute term. It is performing better than the logical expectation.
So is a Mercedes-Benz E320 expensive to own and operate? Certainly in an absolute sense. Most other cars cost less. But, when its cost to own and operate is plotted against cars with comparable invoice prices, the E320 costs less. So the E320 is not expensive to own and operate - it is a good car value. The Mercedes does not have low ownership costs, but it has low ownership costs for its invoice price.
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Article From Motor Trend Magazine
2006 Truck Of The Year: 2006 Honda RidgelineThe Take Truck Two: Make No Mistake, The Honda Ridgeline Is A Thinking Person's Truck / By Kim Reynolds / Photography by John Kiewicz /
Article provided by: Motor Trend Magazine
You'd IMAGINE the unanimous vote for the Honda Ridgeline would be a surprising conclusion to our 2006 Truck of the Year showdown. Truth is, after two long days thudding over concrete freeway expansion joints, howling around a tight handling course, and skittering along a stony off-road trail, this one was about as simple as it gets. Which only makes the truck market's hesitance toward this newfangled but remarkable machine all the more puzzling. We'd wager more than a few of those check-writing hands have been frozen by the Ridgeline's eye-of-the-beholder angular bodywork and bent-bed profile. We can understand that. Others have balked at its premium price, which ranges anywhere from $28,250 to $35,190 for our loaded, moonroof- and nav-equipped RTL example (the average out-the-door tab being about $32,000). Yet, it's tricky to gauge the Ridgeline's value without a reference to judge it against, and at the moment the Honda's in a class of precisely one. Compared with some of this year's other contestants, the Ridgeline's price really doesn't seem too far out of line. But for the same number written on the check, you could just as easily have, say, a V-8-engined Ford F-150 4x4--and on the face of it, a lot more hardware than the V-6-engined Honda.  Rear gate opens like a door or swings down. And its subtly cut-down height aids aerodynamics and rearward vision. So how did the Ridgeline win over the judges? Because from behind the wheel, the Ridgeline's a revelation, upending every attempt at a conventional dollars-and-cents calculation. It's brisk, needing just 8.5 seconds to reach 60 mph (matching, by the way, the time of our V-8-powered 2004 Ford F-150 winner). But, more subtly, it conveys the sense of having been pollinated by its BAR Honda Formula 1 cousin (what happens in Honda's Tochigi R&D center stays in Tochigi's R&D center, we say). "The Ridgeline's handling didn't seem overly impressive until I looked at the speedo," said one editor. "The fact is, I was confidently carrying much more speed than in the other trucks, but it seemed like a Sunday drive." (related content) 2006 Truck Of The Year Road Test: Truck-Hunting Season Opens This Year With All-New Rulebreakers - And Even Tougher Game. Get the Full 2006 Truck Of The Year Story Here! | While the Ridgeline's steering is unusually crisp, its brakes' triggerlike response is somewhat supernatural for a truck. Around our cone-course evaluation circuit, every Ridgeline driver's first lap was reliably (and amusingly) punctuated with laughably premature stops, tens of feet before they were needed. The brakes are maybe even a mite too togglelike for graceful corner carving, but in the screech and go of modern traffic, they're a godsend, letting you follow at almost carlike distances. No need to back away to that prudent extra half a gap that's demanded by typical pickups. ... >>next page
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