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Smart Shopper True Cost to Own (TCO) - Hidden Costs of Car Ownership
157 messages, Last post on Jul 09, 2009 at 3:57 AM
You are in the Smart Shopper Forum. Your Hosts are kirstie_h & tidester
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I'm new here and loved the concept of "cost per mile". But I feel that the current configuration of the TCO tool is more valuable as a reference tool than as a purchase aid. And I'm sure many who visit Edmund.com would die to have more purchase aids as the site has already provided. A main function of purchase tool is to compare different vehicles. Here, the TOC tool is extremely easy to compare among vehicles in the same category. It seems that difference in depreciation cost (market stat) is the most significant, followed by that in fuel cost (EPA rating). Reliability stat is reflected in repair costs. The rest are of much lesser significance. Now, my questions are: 1. Why 15K miles per year when many insurance co's take an average of 8K miles, and I've read American average about 10K miles? This would significantly affect differences in fuel costs. It would be better to make a calculator to allow users to enter their estimated annual mileage. 2. Why not make a calculator to allow users to enter their perspective "EPP" - estimated purchase price? Unlike the TMV calculated by Edmund.com, which is a national or state-wide average over a fairly long period of time, EPP would reflect opportunity costs associated with the user's local market and timing. The two calculator suggested here really won't cost much, and they won't skew any other factors that make TCO tool truly valuable. (The annual mileage input can further affect repair cost; and maintenance to a lesser extent.) Let me explain the second calculator (input box, really) further. The concept of opportunity cost is like the following. In the category of vehicle I'm considering buying, one manufacturer is offering deep discount on a certain model (for whatever reason) in my region yet others in my region stick to their MSRP - or a less competitive discount. The TMV cannot possibly reflect such local and temporal market condition. In other words, my decision window is significantly shorter than TMV's stats window. Let's say TCO of a Toyota model beats a comparable Ford model by $3,000 using TMV as base, but Ford is offering $4,000 discount below TMV. Which model carries a lower TCO for me, who need to make a decision today, in this town, not over a period of six months across the state? Another possible calculator (input box): financing cost. Nowadays, different manufacturers can roll out different financing incentives for a certain period of time. And this difference is not taken into account in TCO tool. So the buyer would have to figure out if a 0% financing incentive is worth $0.05 per mile fuel cost over 5 years. Such a calculation would be fairly straight forward if user data are allowed in TCO tool. And what if I usually keep a vehicle for 3 years rather than 5 years? The point is, temporal and local market fluctuations do not favour averaging methods used in TMV and TCO when used as a purchase tool. Additionally, certain personal usage patterns (annual mileage, total ownership period) can also affect TCO comparison. My 3 cents. |
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 I found what I think is a big discrepancy in the TCO on the 2007 Honda Fit and Sport Fit. Edmunds TCO shows $111 difference in insurance costs between the two trim levels in the first year of ownership for my zip code. In fact, our insurance company charges $650 more a year for the Sport Fit than they do for the regular trim. That's a mighty big difference IMHO. Makes me wonder about the other numbers...
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Replying to: iamacat (Sep 04, 2006 7:05 am) $650 more to cover alloy wheels and some body trim? It is the same exact car as far as engine/transmission... Those are the variables that insurance companies usually worry about. regards, kyfdx Not the host here |
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Replying to: kyfdx (Sep 04, 2006 7:08 am) 
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Replying to: iamacat (Sep 04, 2006 7:29 am)
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Replying to: mikefm58 (Sep 04, 2006 10:48 am) |
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Replying to: mikefm58 (Sep 04, 2006 10:48 am) What surprised me was how small the difference was in premiums between the 3 cars we're looking at: Fit Sport, Civic Si, or Element SC. The Si was the most expensive (which I expected), but only about $30/year over the Element and $80/year over the fit. |
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Another good resource that has been around for years is Intellichoice's Complete Car Cost Guide. The book takes into account the most common expenses incurred when purchasing and maintianing a vehicle. Additionally it breaks the expense of ownership down to the cents per mile driven for each vehicle. Is it the end all to researching which vehcile is the best value? No. However it is an excellent resource when combined with other material. JFKnott Author of: From Zero to Hero, How to Master the Art of Selling Cars
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Replying to: jfknott (Apr 13, 2007 5:23 am) I invite you to visit our Stories from the Sales Frontlines discussion which you should find interesting and I'm sure you would have some tales to share that other members would love to read! tidester, host SUVs and Smart Shopper
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Replying to: tidester (Apr 13, 2007 6:37 am)
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