| IntelliChoice 5-Year Ownership Costs |
Cost of Ownership
Look beyond sticker price to find the best values
Everyone wants a "good value" when making a major purchase, but identifying a better-than-average automotive deal requires collecting and processing a great deal of information. Fortunately, this key information is the cornerstone of IntelliChoice's business--crunching data to help automotive consumers make informed buying decisions. This buyer's guide offers a detailed breakdown of the costs that affect the value picture for every mainstream 2005 car, SUV, truck, and van sold in the United States. In most cases, three trim levels are presented, though a few models feature only one or two due to either a limited lineup or the manufacturer considering some traditional variants as option packages (such as a bigger engine), rather than distinct, trackable trim levels. While this magazine reveals the figures for nearly 700 distinct vehicle trims, the IntelliChoice Web site (IntelliChoice.com) covers more than 1,700 for the 2005 model year.
Important to understanding value is recognizing that the price you pay to buy a vehicle is not the only cost involved. Although "price" and "cost" are related, they are two very different things. Price is simply how much money you must pay the seller to acquire a particular vehicle. As soon as you slip behind the wheel, turn on the stereo, drive home, and park your new vehicle in the driveway, you start to incur costs. The vehicle begins to depreciate. It will use fuel and require maintenance. You'll have to pay insurance premiums, state fees and taxes, finance charges, and at some point down the road (if you own your vehicle longer than the manufacturer warranty covers it), repair bills. These are the vehicle's ownership costs. When you're looking for a good value, it's prudent to consider these costs, rather than focus solely on the purchase price.
To illustrate this point, here's a scenario for a shopper looking for a well-equipped minivan with a V-6 engine, 2WD, and all the latest safety and convenience features. This consumer has budgeted $32,000 for his next vehicle, ensuring it will better equipped than the midlevel model he's trading in. This family-oriented driver might pull together a comparison list that would include the Buick Terraza CXL, Ford Freestar SEL, Honda Odyssey EX, Mercury Monterey Luxury, Nissan Quest SE, and Toyota Sienna XLE. All these models have MSRPs within $3,600 of each other and a high level of standard features. Within this targeted niche, the Freestar stands out as the price leader, carrying an MSRP at just under $30,000.
However, the window sticker only tells part of the story. Doing your homework to learn the specifics of the vehicles you're considering and how each stacks up against the competition and then comparing the contenders' costs of ownership will bring the key vehicles to the top of your list. And the results can sometimes be surprising. As we chart ownership costs for this peer set, we can better understand these vehicles' relative values.
The minivan segment recently has seen dramatic turnover, with nearly every model updated or replaced within the last three years. Researching this mainstream segment, the Freestar grabs immediate attention with its attractive price for the uplevel SEL model. You might be surprised to learn, however, that although the vehicle was significantly freshened in 2004, the essential platform dates to the 1990s, and its features, refinement, and powertrain are not on par with those of its import competitors. Fitted with the largest Freestar engine, the SEL has a 4.2-liter/201-horse V-6, producing as much as 54 horsepower less than other powertrains in this group. Yet the Freestar's fuel economy ranks near the bottom of the segment. It does offer the key features families look for, such as side curtain airbags, fold-flat third row seating, stability control, and parking sensors. The Freestar is attractive priced, but the IntelliChoice data reveal that this minivan's projected five-year cost of ownership is thousands more than some better-executed, higher-priced minivans. Simply stated, the Freestar SEL earns a "Worse than Average" long-term cost rating. Step up to the Freestar Limited and this rating drops to "Poor."
A mechanical twin, the Mercury Monterey is a more polished version of the Freestar. The luxury halo and more premium trim bits bring a sticker-price penalty, however. The Monterey Luxury selected for this study suffers from a high depreciation rate and poor performance in other ownership-cost categories, resulting in a five-year cost of ownership that stretches $4,754 more than that of the comparably priced Nissan Quest SE. Ford loyalists would fare better today, and five years down the road, by purchasing the Freestar SEL rather than the Monterey. But Intellichoice's statistics suggest looking elsewhere in the minivan category for value.
Buick enters the segment for the first time with the Terraza, the most luxurious GM corporate minivan variant. This basic design is also shared with the Chevrolet Uplander, Pontiac Montana SV6, and Saturn Relay. Nicely trimmed, the Terraza offers a Mobile Digital Media system, DVD entertainment, self-leveling rear suspension, and all-wheel drive. These trick features are tempered by a subpar 200-hp V-6 and absence of true foldaway rear seats, though folding the seats forward can create a flat load surface. In its first production year, the Terraza CXL earned an Average ownership cost rating. This is a vehicle that has a few overt weaknesses, but remains an appealing purchase for those who favor traditional domestic luxury.
For extroverted shoppers, the Nissan Quest enters its sophomore year with no significant changes. Inside and out, the Quest looks like a concept vehicle, with its unique lines, artsy dashboard, and available four-panel Skyview sunroofs. It offers all the expected minivan virtues wrapped in a daring package, motivated by the coveted 240-hp VQ V-6. Although an Average value, the Quest SE offers buyers the delight of bucking the mainstream.
Toyota took a more conservative approach with its relatively new Sienna minivan, effectively adapting all the best features on the market to its own product. The result is a large, refined vehicle that covers all bases with style. In fact, the top-end models could even be comfortable with a Lexus badge on the hood. In generously outfitted XLE trim, the Sienna is an Excellent value. At the far end of the Sienna spectrum, the all-wheel-drive XLE Limited's value rating dips to a still-impressive Better than Average, revealing a strong value story for the entire range. Smartly executed, the Sienna is an attractive buy for both product and value.
Representing the gold standard, however, is the all-new Honda Odyssey. The previous generation won last year's Best Overall Value awards in both minivan price categories, and this fresh model has accomplished the same impressive feat. In fact, the 2005 Honda Odyssey ranks as an Excellent value in every trim level, making it both an easy and Smart choice--just select the variation that best fits with your budget and needs. Beyond its value status, the Honda Odyssey is an exceptional machine, setting the benchmarks for performance, technology, and packaging. Features such as cylinder deactivation, a rear backup camera, and a noise-canceling audio system help the well-engineered vehicle stand out from the increasingly upscale crowd. Its base 255-hp V-6 engine sets a new milestone for minivan performance, coming within five horsepower of last year's Ford Mustang GT with its 4.6L V8--impressive, indeed.
Focusing on the cost figures here, the sticker price for the Odyssey EX with leather falls right in the middle of this field. The $30,295 price nets a very-well-kitted vehicle, with all the basic power amenities, plus in-dash six-disc CD changer, remote keyless entry, power moonroof, tri-zone automatic climate control, and aluminum wheels.
With respect to resale value, the Odyssey, with a sticker of nearly $1,300 more than the Freestar, holds its value significantly better than the Ford, meaning it would provide more equity for trade in on the next vehicle. This proves that paying more up front can not only save money in the long run, it can also result in the ability to acquire a better vehicle the next time around.
IntelliChoice's analysis forecasts that the Odyssey, with low operating costs and high resale value, is the best value choice in this segment, capturing both 2005 BOVY minivan awards. The Honda's five-year ownership costs are $7,141 less than the Buick Terraza CXL's, which stickers for $875 more. Paying $2,315 more for the Mercury Monterey ends up costing an additional $9,706 over five years, largely due to the Merc being expected to retain only 29 percent of its sticker price. In this specific example, the Toyota Sienna also shines; it too should be on every minivan shopper's list. As illustrated by our example, it pays to do your homework and go beyond the basic sticker and invoice pricing to identify the standing and operating costs of any vehicle you're considering purchasing. With the information found in this magazine, you too can perform a basic Cost of Ownership analysis on the models that most appeal to you.
