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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 Automobile Magazine
2008 Ford Fusion SEL
By Joe DeMatio
Although it's a credible entry in the mid-size family sedan segment, the Fusion has never attained the exalted status that this magazine and many other parties have bestowed on the Mazda 6. The 6, after all, shares its underpinnings with the Fusion and other FoMoCo products. In an attempt to capture some of the Mazda's good vibes, both four- and six-cylinder front-wheel-drive Fusions are newly available for 2008 with an $895 sport package that includes eighteen-inch wheels, red seat inserts and stitching, and a sport-tuned suspension. These mild tweaks hardly create an SVT Fusion, but our four-cylinder test car with a five-speed manual was reasonably satisfying to drive. While not as refined as the Chevy Malibu, it's miles ahead of the Chrysler Sebring. The Fusion's damping was decently firm and its shifter was pleasant, but short gearing makes for a lot of revs on the highway. The steering, alas, was overboosted. Still, the Fusion reminds us that the basic versions of most family sedans are underappreciated, and no one need feel terribly deprived for passing up a V-6. A new Mazda 6 arrives later this year, and one hopes that its platform will eventually imbue the next-generation Fusion with a bit more of that Mazda magic.
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What to lease. Help!
Franky, I'm shocked that you can get $200 per month payments on a roughly $20K car.
If you're cross-shoping fords and...
04/30/2007 | 22:04 PM | joela
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Ford Fusion SVT?
Reports are flying that Ford Motor Co. didn't drop the SVT team but is actually looking to expand the high-performance...
05/22/2006 | 17:05 PM | joela
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