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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
Want a hybrid SUV? Finding one may be harder than you thinkJuly 7th, 2008 / By Andrew Strieber /
Article provided by: Truck Trend Magazine
With the average price of unleaded approaching $4.11 a gallon, many commuters fed up with gasp-inducing fill-ups are quickly switching to smaller cars. But let's face it, not every Tahoe owner can downsize to a Honda Fit, some large-SUV drivers actually need the room a large SUV provides. The obvious solution is a hybrid SUV, which offers family hauling ability with better fuel economy (and often a tax break). Today's buyers even have a variety of gas-electric SUVs to choose from -- or at least they would, if any were available. It turns out that as demand for hybrid SUVs rises, the vehicles are becoming pretty hard to find.  2008 Ford Escape Hybrid Ford offered the first hybrid SUV in 2005 with a gas-electric version of its Escape, and since then it has been joined by vehicles from Toyota, Chrysler, and Saturn, among others. Yet still, finding an available hybrid SUV at your local dealership isn't easy as spiking demand outpaces limited supply. Production of the 2008 Saturn Vue hybrid has been slowed by battery problems in last year's model, and even though GM has begun a major promotional push for its Tahoe and Yukon dual-mode SUVs, the automaker is only making them in small numbers -- and only half its dealers actually sell them. Ford plans to build 24,000 examples of its Escape and Mercury Mariner hybrids combined this year, but many buyers still face months-long wait lists to get one. With sales down across the board for the auto industry, dealers are also complaining about a lack of hybrid SUVs, considering it's one of the few segments where demand is actually growing. Most vehicles sit on dealer lots for two months before selling, while hybrid SUVs are moving in just 17 - 38 days on average. Yet despite this, even Toyota -- which offers a wide array of hybrids across its lineup -- isn't building enough gas-electric Highlanders. Buyers who do manage to find a hybrid SUV often have little choice when it comes to options, and deals are pretty much nonexistent -- Ford Escapes are selling right around their top MSRP of $30,000, while GM's dual-mode SUVs, which just recently looked like a sales flop, are now going for $2000 - $4000 over sticker. With Chrysler's hybrid Aspen and Durango on sale this summer and a new Saturn Vue 2 Mode Hybrid due in the fall, consumers will have a larger pool of hybrid SUVs to choose from soon. But if you're planning to get a gas-electric Ford Escape or GMC Yukon in the next few months, you might want to put your name on a local dealer's wait list now -- just don't expect a discount. Source: The Detroit News
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