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The amounts shown are not off-the-wall. Really. They were rigorously developed and tested. E.g., the taxes & fees reflect contact with DMV's in each of the 50 states and the District of Columbia in order to understand and apply each jurisdiction's tax & fee rules relative to each of the nearly 1800 2002 model-year styles included in the TCO tool. Similarly, the maintenance costs reflect the parts & localized labor rate costs for the performance of factory-recommended scheduled maintenance operations at the prescribed mileage or calendar intervals, and the parts & localized labor cost of unscheduled maintenance such as tire, battery, headlamps, brakes, timing belt, etc at the approximate replacement intervals.
What happens when you run the TCO on these cars? The Solara is a couple of thousand less.
Maybe Edmund's review writers should do a little homework with this tool...
Oh well. Sale price is $12,799(as stated, $14,599 or so?). So sales,etc, could effect the outcome. At least the stories I have read seem true. Elantras are now about Avg resale value.
As example, let's compare a Ford Taurus and a VW Passat, the Taurus costs 20k new, the Passat 25k. Most people will buy the Taurus because its 5 grand less, right? Wrong, after 5 years, the Taurus cost you 37k to own, the Passat only 35k. So you can drive a 5k more expensive car for 2k less ... interesting, isn't it. I am sure many of the cheap cars (Koreans, Americans) that are only bought because they cost a few grand less inititally, are actually more expensive in the long run. And even then, the tool at Edmunds isn't correct with everything, for example, why does it show maintenance costs of almost $800 for the first two years, when the Passat is offered with 2 years free maintenance??? What else am I supposed to pay if I have a new car under warranty and free maintenance. Maybe the air fresheners are so expensive ... hmmmm.
Another flaw, in my opinion, the taxes are calculated on the total price of the car. However, they should only be calculated on the depreciation because I won't pay taxes on the remainder when I trade the car in. Otherwise, it needs to be spread out on the years AFTER the first 5. Overall, the whole TCO shows too high values, insurance as well as finance costs are on the high end.
Another really interesting view would be a buy/lease comparison where some of the regional subsidized lease options could be included, compared to 3, 4 and 5-year loans. I suspect the cost to own a, say, BMW 325i might be lower over 3 years than a similarly equipped Passat when the lease incentives are included.
For most people, a more expensive car is part of a more expensive lifestyle, and the decision to get the better car is usually tied to decisions to get better sofas, move to a bigger house in a nicer neighborhood and the like. I don't think the TCO tool could ever take into account these sorts of factors, nevertheless they are an important consideration in the minds of many buyers. Even if the $35k car is cheaper due to less depreciation, not everyone can afford the corresponding move, furniture shopping, and pampering that is part of a lifestyle that the $35k car would fit seamlessly into.
kirstie_h
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But sphinx has a point. Many people even buying the Taurus are in hock for it so buying the more expensive car which is really not the more expensive "in the long run" isn't an option for them.
TCO is a better tool for people shopping two cars of just about equal MSRP, not for encouraging them to buy what they can't afford because 5 years down the road it will be cheaper by $2K.
New Edmunds.com Tool: TCO
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KarenS
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Owners Clubs
New Edmunds.com Tool: TCO
Thanks!
KarenS
Senior Host
Owners Clubs
However, I like that it shows just how small a percent of the total cost of operating a vehicle is due to fuel costs. And these figures are based upon 15k miles driven anually, which is probably a little higher than average.
Is finance a constant number based solely on price, or does it vary depending on make and model?
Edmunds predicts:
$13,428 Depreciation
$5,269 Financing
$7,821 Insurance
$1,871 Taxes and Fees
$4,604 Fuel
$1,644 Maintenance
$558 Repairs
$35,195 Total
= $0.46 per mile over 5 years & 75,000 miles
My Actual:
$13,700 Depreciation ($20,700 purchase price - $7,000 estimated resale value today)
$0 Financing (paid cash)
$5,240 Insurance (multiple car discount)
$2,050 Taxes & Registration (includes 6% initial sales tax)
$7,358 Fuel (averaged 23.98 mpg since new)
$4,688 Maintenance (routine, nothing unusual)
$1,015 Repairs (including $600+ "Dent Wizard" ding removals)
$34,051 Total
= $0.2724 per mile over 125,004 miles, 7 years & 7 months as of 5/1/02
If I added an "opportunity cost" of 5% per year on the $22k that I paid in cash for the car (i.e. in lieu of financing), that would add $1,100 per year or roughly $8,250 / $0.066 per mile, bringing the total to $0.3384 per mile. But frankly, I was better off putting my cash into the car compared to how poorly my stock portfolio performed in the last few years.
The big flaw I see with the Edmunds estimate is in the area of maintenance. If they think that 5 years and 75,000 miles is only going to cost $1,644, they are SMOKING DOPE. I religiously took my car to the dealer every 7,500 miles for the first 75,000 miles and every 15,000 miles since. Over 75,000 miles, that would work out to (5) "A" services at about $150 each, (3) "B" Services at about $250 each and (2) "C" services at about $350-400 each. Just routine scheduled service would be $2,000 to $2,500 over 5 years. I changed oil every 3,500 to 4,000 miles, so add another $300 for 10 between service oil changes. I guess Edmunds assumes no new tires until 75,001 miles? Add $400 for a 1995 SE, a lot more for a 2002, from what I hear. I can't imagine the total for maintenance over 75k miles not being at or above $3,000, based upon my $4,688 over 125k miles with NO significant unexpected maintenance and a cheaper car on the tire front.
Maintenance aside, I was glad to see that I beat the $0.46 per mile Edmund's estimate by a significant margin (and I didn't even skimp on premium gas to do so!).
Otherwise, buying cash certainly is a smart alternatively, unless there are some subsidized rates available, otherwise, you will have a hard time getting your 7-8% interest back AFTER paying 30-35% taxes on your earned interest.
When I checked the TCO of a 5-series BMW, Edmunds showed almost $12,000 in finance charges, shocking, and the first thing that I am going to subtract ....
This is based upon the assumption that while resale value, insurance and maintenance costs might not be the same from one place to another the relative cost between models is probably pretty close to the same regardless of location. Afterall, its not like the consumer is choosing between an Accord in Atlanta and a Camry in Chicago.
How can this be since the Trailblazer and Envoy are virtually the same vehicle under the skin-powertrain, etc.??? Any ideas?
One question: What warranty do you have that your maintenance is covered? I consider maintenance as oil change, tire rotation, transmission fluid change, coolant change, etc. I know cars such as MB, BMW and Lexus do include maintenance in their basic warranty but the other 90% of the cars on the road don't.
Depreciation: $14,652 ($26,596 purchase price - $11,944 resale)
Financing: $6,068
Insurance: $6,075
axes & Fees: $2,246
Fuel: $4,650
Maintenance: $3,821
Repairs: $623
Total TCO: $38,153
Cost per mile: $0.51
Note that the Maintenance cost is significantly higher than the amount shown when TCO was introduced a month ago. The initial lower amount resulted from the application of an incorrect engine size within our database.
Our assumption is tire replacement in the 5th year. The cost of a set of tires is included in the $1,553 Maintenance cost for that year.
I don't know why they didn't include this, it seems to be fairly simple to do. I've seen the same kind of thing done with mortgage and retirement calculators all over the web.
Oh well my suggestion is to do your own TCO, by my estimates my TCO for my car is $33,560 over 5 years, far below Edmunds' estimate of $46,033. All I did was put in the corrected finance and insurance information along with the correct amount I paid for the vehicle. I kept their depreciation results, but I had to throw out their repair estimate because my warranty will still be valid after 5 years.
On their comparison chart my car goes from the most expensive, to the least expensive by a large margin. I'm not even taking into consideration that I was able to take my $5k down payment and put it into a 6.7% interest CD over the next 5 years. That alone will make me an additional $2200 by itself. Also I didn't take into consideration gas mileage which is exceptionally good, and that I only drive 10,000 miles a year. Those things would easily take the TCO down another $3,000.
Funny how the most expensive in the chart becomes the least expensive when the correct numbers are applied.
I have a 2001 vehicle that shows Trade in of 19,398, Private party of 20,759 and a dealer retail of 23,448. Why in your TCO does the resale/depreciation show different? by thousands of dollars????
When looking under the projected resale under TCO it does not match the TMV Edmunds posts for this vehicle.
Another thing Edmunds has posted incorrectly is the ground clearance for the Escape is 7.8" and they list the 235 tire. This is incorrect. Ground clearance is 8.5" with the 235 16" rim/tire and 7.8" with the 225.15" tire.
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Regarding the Escape's ground clearance and rim/tire size, although different ground clearances might be expected with different tires, all of our Ford sources show only a 7.8" ground clearance for all Escapes whether equipped with 225.15 or 235.16 tires. These sources include Ford’s dealer guide, media site and Escape brochures. If information is received from Ford indicating a different ground clearance, we will modify the data on our site.
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i chose an '04 escape xlt, ct zip code. why is maintenance in year 1 over $1000?
I use it as a filter. If the cf isn't clean, forget it; if it is, I check the car out carefully.
-Mathias
For instance, look at the TCO of the 02 Civic Si vs. the 05 Civic Si. In my zip code, the TCO are 28,187 to 31,107, but TCO assumes some average mileage per year - say 15k mi. Since maintenance costs are more closely coupled to mileage than deprecation, if I drive, say, 50k mi a year, the TCO would probably come out to be somewhat similar, and I'd be getting a new car. If the TCO for older cars was available, I'd compare vs. 5-10 year old cars, but none of the really old cars I've looked at have TCO information.
The only advantage I can see is that the car would take a smaller loss in the case of an accident. Am I missing something? If this is correct, what’s the advantage of buying a 3-4 year old car?
If so, forget Edmunds TCO, your best bet is a VW TDI. It's the best car for the dollar for high-speed high-mileage driving available in NA. Any extra repair you have to put into it as compared to a Civic is easily offset by fuel-cost savings. A TDI will average better than 50mpg on the highway, and has 10K mile oil change intervals. You could probably go 3 months between oil changes as opposed to a month or so with a Civic.
VW's are, by nature troublesome cars compared to Hondas.
Honda calls for 10,000 mile oil changes on Civics also but I know I would never let any car I owned go that far.
then the hassel of diesel...the stink etc.
No thanks!
The station next door is selling unleaded for $2.41 and diesel is $2.79