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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 Truck Trend Magazine
First Drive: 2008 Toyota SequoiaCredible Tahoe-fighter from the automaker that brings you the Prius / By Todd Lassa /
Article provided by: Truck Trend Magazine
Let this serve as notice that the Detroit Three are not unique in their propensity for bad timing. Toyota fails here, too. The long-awaited, long-overdue real full-size Tundra pickup launched just as the housing market was putting the kibosh on full-size pickup sales. The Sequoia launches a year later, having been developed when full-size, truck-based SUV sales were beginning to slide from 800,000 per year to 500,000 per year (Toyota's numbers). If you think of Toyota as being smug, though (an image that the Prius and its owners foster), well, then the World's Most Fantastic Number One automaker can continue to be smug. The Tundra is meeting Toyota's conservative sales projections. Toyota says it hopes the new Sequoia can claw its way back to a peak of about 65,000 sales per year, roughly twice calendar year '06 numbers, and that seems reasonable, even in the current market. Like Tundra, Sequoia is vastly improved and should grab a larger share of its shrinking segment. Tundra's aluminum 5.7-liter V-8 is optional on SR5 and Limited and standard on the new Lexus-like Platinum. The old 4.7 iron block remains the base engine until a new smaller V-8 derivative of the 5.7 is ready. Tundra's familiar dash makes it into the Sequoia, but the horse-collar grille is toned down a bit, as if to say, "I'm not really so massive." The dash is still disappointing in its plastic-ness, and looks better in photos than in the flesh. But the days of making an SUV by slapping a station wagon body onto a pickup truck are long gone, and here, Toyota doesn't disappoint. The Sequoia gets an independent rear suspension, replacing the old Sequoia's live rear axle, and re-tuned steering. The steering is "for females," and that's according to chief engineer Motoharu Araya, so direct your emails about male chauvinism elsewhere. Toyota boasts a 39-foot turning diameter, which happens to equal that of the Chevy Tahoe and GMC Yukon. ... >>next page
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