Advice from Intellichoice: Used vs. New Ownership Costs (2008-2010)

What is the difference between new and used car ownership costs over the three year (2008-2010) period?

IntelliChoice's used car ownership costs cover the latest three used model years (the most likely years offered as certified under manufacturer pre-owned vehicle programs), but they are still based on a five-year projection of what a vehicle will cost to own and operate during that time. Therefore, a vehicle in the most recent used year is assumed to already have 14,000 miles, and so on. Notably, most used vehicles have already taken the heaviest hit on depreciation costs, so many one- to three-year-old vehicles will see that cost level off, while the costs of maintenance and repairs will rise as the vehicle ages.

Both new and used vehicles have costs calculated for depreciation, maintenance, repairs, fuel, state fees, insurance and financing with winners for used vehicles being determined by examining those costs over the three year (2008-2010) period.

Specific differences in the analyses are as follows:

New Cars (2012)

Used Cars (2008-2010)

Analysis Date: January 2012

Analysis Date: September 2011

Update Frequency: Annually and Monthly

Update Frequency: Annually

Ownership Cost Period

Five years from current calendar year.

Five years from current calendar year.

Annual Inflation Rate

2% (5.8% for fuel)

1.7% (8.54% for fuel)

Annual Mileage

14,000

14,000

Vehicle Price Basis

Total target price based on market conditions, plus destination charge and average taxes and fees.

Mid-way between the current wholesale and retail value plus the used value of the engine selected as part of the vehicle equipment.

Vehicle As Equipped

Selected configuration of vehicle is based on target equipment by class within manufacturer build order restrictions; we attempt to use the "most desirably equipped" version with target equipment and engine size at the most reasonable cost to consumer.

Vehicles are assigned selected powertrain based on Ward's data showing the greatest percentage of vehicles produced with that engine size; transmission as required by target engine; otherwise standard equipment assumed.

Depreciation

Based on the assumption that you keep your vehicle for five years, after which time you sell it in a private party transaction (not sold to a dealer). Also assumes that the vehicle is in good condition with 70,000 miles (14,000 miles per year).

Based on the assumption that you keep your vehicle for five years, after which time you sell it in a private party transaction (not sold to a dealer). Also assumes that the vehicle is in good condition with cumulatively not more than 14,000 miles per year (based on the model year and age of the vehicle). For the oldest year this would be no more than 112,000 miles.

Insurance

Due to the extremely varying nature of insurance costs, the figures listed are estimates for comparative purposes. IntelliChoice assumes the following: • Principal operator is under age 65; • all drivers have more than 15 years experience with no chargeable accidents; • vehicle is for personal use; • driver lives in a suburban/urban community;

• Personal liability: $100,000/$300,000; Property: $50,000; Uninsured driver: $25,000/$50,000; Medical: $25,000; Comprehensive: $500 deductible; Collision: $500 deductible.

Same as new vehicles.

Maintenance

Includes both scheduled and non-scheduled maintenance. Cost per service is based upon industry-standard service times and national labor rate averages. Parts prices are based on manufacturer's suggested list price where available.

Same as new cars. Parts, services and maintenance items are carried out to more-extended intervals due to increased mileage on these vehicles.

Repairs

Repairs are based on a contract of 7 years or 100,000 miles with zero deductible and adjusted down to a 5-year or 70,000 mile ownership period. Service contract pricing is further modified to account for reasonable profit and a longer than standard manufacturer warranty.

Same as new vehicle.

State Fees

Title and registration fees are based on new car vehicle sales as a weighted average for all states. Registration fees vary depending on the weight, price and class of the vehicle. Average sales tax is 5%.

Same as new vehicle.

Financing

Assumes 20% down payment on a 60-month loan and an annual interest rate of 4.05%.

Assumes 10% down on a 60-month loan and an annual interest rate of 4.94%.

Fuel

U.S. Government EPA mileage figures. Mileage is 60% highway driving, 40% city. Fuel cost per gallon is $3.57 for unleaded regular, $3.69 for unleaded mid-grade, $3.82 for premium, and $3.88 for diesel (subject to 5.8% inflation). (Based on Energy Information Administration U.S. average)

U.S. Government EPA mileage figures. Mileage is 60% highway driving, 40% city. Fuel cost per gallon is $3.70 for unleaded regular, $3.83 for unleaded mid-grade, $3.96 for premium, and $3.95 for diesel (subject to 8.54% inflation). (Based on Energy Information Administration U.S. average)

Gas Guzzler Tax Credit

Included in Total Target Price if required by selected powertrain

Does not apply.

Vehicle Classifications

There are a total of 26 different vehicle classifications

Same as new vehicle.

General Methodology and Ratings

IntelliChoice assigns ratings at the trim level and model line ratings that include individual statistical/economic performance of each trim within the model line groups, generating an average of those figures.

IntelliChoice assigns ratings at the trim level for all three years and a model line rating that includes individual statistical/economic performance of each trim within the model line groups, generating an average of those figures over three years.

Best Overall Value

Winners are determined by analyzing the costs and ratings of the model line level information. Winners are those model lines that have the best overall value in their respective classes.

Winners are determined by analyzing the costs and ratings of the model line over the three years included in the study. Winners are those models that have the best overall value over three years in their respective classes.


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