Most cars aren’t good investments — the only return you’ll earn from owning one is a way to get around.
High-end cars may depreciate less, but buying a vehicle with the lowest possible sticker price is one of the best ways to minimize a car’s cumulative drain on personal finances. That’s because owners will never recoup the full price paid for a new car after factoring in all of the expenses associated with owning and maintaining it.
Think of a car as a “good investment” in terms of how much money you have left after buying it to invest in financial products that actually do give good returns.
Buying one of the 10 vehicles on this list is one way to maximize your money; they are the least expensive cars to own in the industry. But keep in mind that even though these are all relatively affordable models with starting prices in the teens or lower, they’ll still consume well over $30,000 during a half-decade of operation and upkeep.
Our ranking is based on information from Vincentric, a research company specializing in automotive data analysis for vehicle manufacturers, dealers and other clients. Vincentric calculates lifetime ownership expenses by estimating cumulative losses from depreciation, interest and opportunity costs, maintenance and repairs, taxes and fees, fuel and insurance. Go to the “slide show” link to see the full list of vehicles.
Every model on this list of low-cost rides is a small, economical runner classified by the Environmental Protection Agency as either “subcompact” or “compact.” Each one delivers meaningful savings across all ownership-cost categories: Some, like the Honda Fit and Toyota Yaris, have lower fuel demands; others, such as the Nissan Versa, minimize insurance premiums; while vehicles like the Toyota Corolla require fewer expenditures on maintenance and repairs — partly because low-cost cars lack many of the high-tech features that can complicate maintenance.
But remember, the biggest savings start in the showroom: A low sticker price goes a long way. Lower manufacturer suggested retail prices translate to lower loan-interest payments, lower opportunity costs and lower taxes. The biggest factor is, however, depreciation, the value a vehicle loses as it ages. It’s the most substantial ownership cost for any car and those with low MSRPs lose less to depreciation simply because they have less value to lose.
Run-for-less economy cars are good values mainly when approached as a way to satisfy basic transportation needs. Drivers who expect automobiles to give a little more in terms of features and style might consider a Porsche 911 Turbo, one of the 10 most expensive vehicles to own, far more than mere transportation and therefore worth the extra money.
“There is an ego-driven factor to vehicle ownership, and it has no bearing on ownership cost,” says Michael Calkins, who tracks lifespan expenses as manager of approved auto repair at AAA. “There is certainly nothing wrong with that. It's as valid a reason as any of the others” to own a particular automobile, he says.
Don Christy, president and chief executive of NADAguides, a consumer information service of the National Automobile Dealers Association, ascribes intangible values to higher-priced cars that can’t be assigned a dollar value. “The prestige of owning a luxury car and the status it brings compensate people in a personal way,” he says. “Owning a fine automobile — luxury or sport — means having an appreciation for high-quality craftsmanship, excellent fit and finish, fine performance, innovative technology and an understanding and appreciation for the history of the manufacturer.”
Vincentric identifies ownership-cost winners by car class, starting with what lifetime ownership expenses should be based on the vehicle’s sale price. “Since I can predict what the cost to own should be on average, the vehicles that fall below that prediction are a better value,” says David Wurster, Vincentric’s president. “You can identify more-expensive vehicles that are still a better value.”
Helpful Hint: To find vehicles with lower ownership costs, look for models that have high resale values and/or are favored by insurance companies. “Avoid buying cars that are popular theft targets, ones that are expensive to repair, ones with poor safety ratings, or sports cars with lots of horsepower, since their owners tend to drive faster and more recklessly in the eyes of most insurance companies,” says NADAguides’ Christy.
But if your goal above all is to conserve cash, consider one of the 10 vehicles on our list. In the slideshow you’ll find individual model descriptions along with Vincentric’s projected total cost of ownership after five years, including a breakdown of the six components that make up that total: depreciation, interest and opportunity cost, maintenance and repairs, taxes and fees, fuel and insurance.
The ranking includes 2007 models only. Cost estimates are based on prices in effect for mid-July 2007. Interest expenses assume a five-year loan at 6.86 percent and a 15 percent down payment. Opportunity costs consider what owners would have earned if car expenses were placed into certificates of deposit instead. Insurance costs are for a typical driver under age 65, with a clean record. The five-year cost of fuel is calculated by using EPA fuel-economy ratings as published in the agency's 2007 Fuel Economy Guide.
