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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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Review From Motor Trend Magazine
Hatfields McCoys: 2005 Subaru Impreza WRX STi and Mitsubishi Lancer Evolution MR
The feud heats up again, this time in California
By Chris Walton
Photography by John Kiewicz, Brian Vance
illustrators: Kim Reynolds
We love a good feud: Hatfield-McCoy, Blond-Brunette, Yin-Yang, Beatles-Stones, Ferrari- Porsche, Ford-Chevy. It's rivalries like these that make arm-wrestling the passionate sport that it is, that add the suds to beer. A good rivalry helps define one's priorities, revealing each opponent's strengths, and, if you look close enough, imperfections and weaknesses.
If you've been keeping up on your automotive rivalries, you know about the Mitsubishi Lancer Evolution and Subaru WRX sedans. You probably also know they're both currently produced in order to compete in the World Rally Championship. This time around, we've managed to get an exclusive first test of each maker's highest-performance model: Mitsubishi's all-new 2005 Evo MR Edition and the updated 2005 Subaru WRX STi. You won't find this test anywhere else (at least not for another month or two). Nor will you find a more complete or exhaustive analysis of either (however long you wait). We'll spare you the lengthy background on each sedan's turbocharged past and steer clear of the well-worn path to the 2005 model year. Rather, we'll tell you what's new on each and how well the complete packages work in a variety of tests.  | Snapshot: | The Players Last year, Subaru's Impreza WRX STi outgunned the Mitsubishi Lancer Evolution with more horsepower, a more sophisticated driveline, and a higher level of polish. For 2005, Mitsu fires back with a special Evo MR Edition ($34,900 est) to take on a revised 2005 STi ($32,770).
The Game Two fierce competitors in World Rally Championship racing bring their best-yet hardware (and software) to the streets of the USA. We took both competition-derived production cars to the dyno shop and the racetrack to see which would first cry "uncle." |
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