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Value Rating
Below Average
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
Road Test: 2004 Kia Rio vs. 2004 Chevrolet Aveo vs. 2004 Scion xA
Article provided by: Motor Trend Magazine
The real bottom line --Todd Lassa
Manufacturer's Suggested Retail Price" means nothing if you can't get a car for the manufacturer's suggested retail price. Toyotas often command premiums over sticker on the newest, most popular models. Scion should be no exception. But it is, because the new division is designed to eschew dealer tricks that turn bargain hunters away from Toyota. Scion addresses markups in its dealer covenant, but be aware that a dealership is allowed by law to mark up a car or truck as much as it wants. Nevertheless, Toyota says most Scion dealerships are obeying the covenant. And tech-savvy young Scion buyers can find out actual sticker prices for the xA or xB and any accessories before walking into the showroom (prices are listed at scion.com). At Scion, price usually includes installation, whether at Toyota's port facility or by the dealer, so there's no reason to pay an additional markup. The Web site highlights the few accessories that don't include dealer installation, such as cold-air intake. This is a big deal for any baby boomer who remembers shopping Toyota dealerships in the 1970s and 1980s, when it seemed impossible to find a basic Corolla with no or few accessories or without additional dealer incentive. Since Scions come fully equipped, with accessories installed after the cars are built and no options, save for a choice of automatic or manual transmission, it's important that Toyota expects dealers to stock cars at the base price. Scion suggests dealers keep at least one loaded car on hand so customers can see and touch the various accessories, but to meet the covenant, dealers must not add costly items to a car as soon as it's driven off the truck to allow customers to choose their own options. As for bald-faced but legal additional dealer markups, they violate what the Toyota division calls its "pure-price manner of doing business." So you should be able to buy a new xA for about $13,000. A real-world price difference of up to $2600 versus its competitors has more to do with the competition than with Scion dealers. At launch, Chevy offered a $1000 rebate on the Aveo LS, and Kia was offering $1500 in cash for the Rio Cinco. Those deals have ended, but do your homework: If the cars come with rebates at launch, they're likely to have rebates at model-year end as well. And if you belong to any branch of the U.S. military, you're entitled to a $750 rebate on the Aveo up to January 3, 2005. ... >>next page
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2004 Car of the Year Testing
How dare we compare the Pontiac GTO, BMW 5 Series, Acura TL and TSX, Nissan Quest and Toyota Sienna minivans, the premium-luxury
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2004 Car of the Year Testing
How dare we compare the Pontiac GTO, BMW 5 Series, Acura TL and TSX, Nissan Quest and Toyota Sienna minivans, the premium-luxury
more
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