2008 BMW X3 Review & Road Test at Automotive.com

European car buyers head stateside for lucrative savings

Below is a review of the 2008 BMW X3 written by the automotive experts at Truck Trend Magazine. A full evaluation of the driving experience, price, equipment, and specs are here in a structured, easy-to-navigate format from journalists with a wealth of experience.

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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

European car buyers head stateside for lucrative savings

June 16, 2008 / By Nate Martinez / Article provided by: Truck Trend Magazine

The ailing U.S economy and its weakening dollar have most recently attracted auto buyers of a different sort to dealerships across the nation: Europeans looking for a savings of up to an estimated 30 percent compared to prices in their home countries.

Although the re-importation of European built cars back to their home markets is no new occurrence, the buying and selling of new and used "re-imports" is gathering much steam as a result of the widening gap between U.S. and European car values. As cited by a report in the The Wall Street Journal, even after taxes, shipping and conversion, European buyers are seeing significant savings on their U.S.car purchases.

2008 BMW X3

In response to the flood of auto buyers leaving their respective countries to purchase cars stateside, manufacturers are beginning to reinforce non-exportation agreements set in place years ago that issue fines to authorized dealerships who knowingly sell to buyers intending to return the car to Europe.

Re-imported new cars are also not highly sought after by potential European customers due to the complexity in registration, warranty violation and high costs of conversion to European safety and emission standards -- a status that 'grey market' European imports share in the U.S.

As a result, brand new cars being shipped back across the Atlantic are far fewer than "nearly new" used cars that carry no manufacturer's warranty and can easily be converted. Independently owned used car dealerships are not regulated by manufacturers and can sell to European buyers without fear of penalty.

Conversion of European-made models is fairly cheap at around 1,000 to 2,500 euros compared to the conversion of U.S. models not found at European dealerships. Such hard to find models have been known to command upwards of 15,000 euros (thus nixing any savings) for a full renovation. European-made used cars are also easier to convert to current standards versus their American counterparts.

Many shipping companies have turned down customers because of the huge backlog of business. Lead times from the U.S. that once were quoted as taking three to four weeks last year are now taking four to eight weeks.

One example cited by The WSJ was a German nursery farm owner named Rolf Neugebauer who recently bought an XC90, XC70 and BMW X3 in the U.S. Once in Germany, he had the cars converted to European spec and according to him, saved an estimated $31,000 even after taxes, registration, conversion and shipping. Neugebauer stated in an interview that he intends to use them for a year on his farm and sell them for a sizeable profit.

Source: The Wall Street Journal