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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 Truckin' Magazine
2005 Truck Of The Year - Road Test
Make/Model | | ’05 Dodge Ram SRT-10 Quad Cab | Price (as tested) | $32,884 | $50,000 | Engine | 4.7L Magnum SOHC V-8 | 8.3L Viper OHV V-10 | Horsepower | 230 hp at 4,600 rpm | 500 hp at 5,600 rpm | Torque | 290 lb-ft at 3,600 rpm | 525 lb-ft at 4,200 rpm | Transmission | Five-speed Auto | Four-speed Auto 48RE | Suspension | Coil-over shock (f), leaf spring (r) | Independent (f), live axle (r) | Brakes | Four-wheel antilock | Performance four-wheel antilock | Wheelbase | 131.3 in | 140.5 in | Length | 218.8 in | 227.7 in | Width | 71.7 in | 79.9 in | Height | 68.6 in | 74.7 in | Curb Weight | 4,758 lb | 5,450 lb | Towing Capacity (as tested) | 5,600 lb | 7,500 lb | Acceleration (0-60 mph) | 10.41 sec | 6.94 sec | Quarter-Mile Time | 17.81 sec at 75.92 mph | 15.29 sec at 92.06 mph | Braking (60-0 mph) | 152.68 ft | 128.99 ft | | | | | $38,215 | TBA | TBA | | 6.8L Triton SOHC V-10 | 4.0L VQ40 DOHC V-6 | 4.0L DOHC V-6 | | 362 hp at 4,750 rpm | 265 hp at 5,600 rpm | 245 hp at 5,200 rpm | | 457 lb-ft at 3,250 rpm | 284 lb-ft at 4,000 rpm | 282 lb-ft at 3,800 rpm | | Five-speed Auto TorqShift | Five-speed Auto | Six-speed Manual | | Twin coil monobeam (f), rigid axle leaf spring (r) | Coilover independant (f), rigid axle leaf springs (r) | Coilover independent (f), rigid axle leaf springs (r) | | Four-wheel antilock | Four-wheel antilock | Four-wheel antilock | | 141.8 in | 125.9 in | 127.8 in | | 231.2 in | 205.5 in | 208.1 in | | 79.9 in | 72.8 in | 74.6 in | | 79.9 in | 69.7 in | 70.1 in | | 6,299 lb | 4,000 lb (est.) | 4,045 lb | | 12,500 lb | 6,000 lb (est.) | 6,500 lb | | 10.58 sec | 9.77 sec | 10.69 sec | | 18.0 sec at 76.86 mph | 17.52 sec at 80.97 mph | 17.85 sec at 79.36 mph | | 167.81 ft | 139.88 ft | 136.67 ft |
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