The cost of ownership - a crucial factor in choosing a car
Deciding what car to buy is rarely easy. You have to decide on the type you want and what you expect it to do, the importance of the design and performance, the reputation of the manufacturer and car dealer, and usually the cost. With such a broad array of cars in the showroom, both import and domestic, and more on the way, the final choice can be tough. Indeed, the decision could - and perhaps should - come down to the cost of operating one car versus another.Skip to next paragraph
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Two similarly priced 1988-model cars, for example, can differ by more than 25 percent in ownership costs over the next four years.
``While people spend a lot of effort comparing car prices, few realize the importance of ownership costs,'' says Peter Levy, president of Intelligent Choice, a California-based publishing company. ``In just a few years, the average new-car buyer will spend more money to own and operate his car than he paid for the car itself.''
Ownership cost embraces such items as insurance, license and registration fees, taxes, upkeep, and fuel.
You can buy a Volkswagen Jetta, Buick Skyhawk, or Honda Accord for about the same price, says Mr. Levy, but if you figure out the four-year cost of ownership, the best buy among the three is the Accord. The most expensive, adds Levy, is the VW Jetta, with the difference between the two being about $2,500. A guide for car buyers
To give the buyer a cost-to-operate comparison, Levy's company has come out with an inch-thick paperback, ``The Complete Car Cost Guide'' (Intelligent Choice Information Company, $25). It's updated twice a year, and the price for the two issues is $45. It can be found in many public libraries or may be ordered by calling 1-800-CARBOOK. The book lists more than 1,000 cars, including utility vehicles and pickup trucks.
Another area covered is the drop in the value of a car as it ages. A 1987 Pontiac Sunbird four-door sedan with four-cylinder automatic, for example, cost about $9,500 last May, depending, of course, on options. Its projected value three years later, between April and September of 1990 - again, adjusted for options - is $6,718. Depreciation for each six-month period is given, along with the average standing costs for insurance, financing, etc., plus the estimated running costs (fuel, repairs, and regular upkeep).
To come up with the data, the publisher uses such sources as the Kelley Blue Book, Edmund's Car Price Guide, Chilton's Labor Guide and Parts Manual, the Hertz rental car corporation, Consumer Reports magazine, the Environmental Protection Agency, Insurance Information Institute, and others.
The data apply not only to a new-car purchase, but also to the even larger market of used-car sales. One new or used car is expected to be sold this year for every eight adults in the United States.
For the cost-conscious car buyer, it's easy to compare prices, although there is far more to the pricing game than the highlighted price in a newspaper ad. There's a lot of selling strategy involved, and even some deception.
But everything else being equal, what's the best value on the market? For 1987, Levy's cost guide lists the Toyota Tercel, Chevrolet Spectrum, and Dodge Colt E, in the under-$8,000 category. Jumping to the $14,000-to-$16,000 range, the Volvo DL leads the pack, followed by the Mazda RX-7 and Pontiac Trans-Am. In the over $25,000 price class, Levy lists the Porsche 911, Mercedes 300 SDL, and Porsche 928.
He spotlights what he sees as the worst values, as well. In the up-to-$12,000 range, for instance, Levy puts the Plymouth Grand Fury and Reliant LE and the Oldsmobile Firenza near the bottom when it comes to an analysis of purchase and ownership costs. In the next step-up, $12,000 to $14,000, he lists the Chevrolet Caprice, Pontiac Grand Prix, and Oldsmobile Ciera SL.
Levi gives lowest ownership cost awards to the subcompact Dodge Colt E, Chevrolet Sprint, and Toyota Tercel in the under-$8,000 range. In the $10,000-to-$12,000 mid-size field, he lists the Ford Taurus L, Dodge Aries, and Dodge Lancer. Four-year ownership costs range from $14,570 for the Taurus to $16,303 for the Lancer. Comparisons of 4WD vehicles
A 1986 four-wheel-drive Toyota Land Cruiser, with a six-cylinder engine and manual transmission, is estimated to total more than $16,000 in cumulative operating costs over a four-year period. A Jeep Cherokee over the same time period is figured at $13,304, and a Ford Bronco II at $15,304.
The book, which makes it easy to compare costs, reports that some late-model used cars can be more expensive to own than their brand-new counterparts, although the difference may be only a few hundred dollars over a four-year period.
It's a confusing world for car buyers these days as they try to outmaneuver the dealer by cutting through the maze of verbiage in the ads. ``What the manufacturers have done is take a concept, such as the annualized percentage rate, and misled the public with low rates on a very small percentage of its cars,'' charges Thomas D. Mignanelli, vice-president of sales and marketing at Nissan. ``This has hurt the industry.''
Some solid information, such as that provided by Levi, wipes away at least some of the confusion.