Consumer Reports Ranks Brands, Calculates Cost of Ownership at 5 Years

March 05, 2008

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NEW YORK — Consumer Reports released its Automaker Report Cards, which recognize the best manufacturer brands, in its Annual Auto Issue, and receiving the best rating was Honda. This brand also grabbed No. 1 in last year's inaugural report.

Overall, Honda scored 78 out of 100, with Toyota and Subaru following at 75 and 72, respectively.

Meanwhile, BMW, Mazda, Nissan and Volkswagen all scored 71, after scores were rounded.

Import brands performed better than domestics, which, for the most part, earned some of the lowest scores, according to the company.

The magazine calculated scores based on average overall points for vehicles in road tests. Also taken into account were median predicted-reliability ratings.

According to officials, automakers only receive a report card when five or more of its models are tested.

In addition to receiving two of the highest marks, Honda and Subaru were the only two brands with all of their models analyzed by CR and placed on its recommended list.

Moreover, Honda is the only brand whose entire lineup received this honor from CR.

The publication indicated that Honda received the best ratings because of its well-rounded vehicles, reliability and high performance.

However, some of the automaker's vehicles weren't at the top of their respective classes. For instance, the Honda CR-V SUV wasn't rated as highly as Toyota's RAV4.

Also, the Nissan Altima scored higher than the Honda Accord, and the Toyota Sienna narrowly beat the Honda Odyssey minivan.

Even though domestics generally scored lower than their import counterparts, Ford and General Motors showed some improvement, editors indicated.

The number of Ford vehicles tested and recommended by CR increased from 54 percent to 64 percent in the latest review.

This jump can be attributed to better reliability, as 93 percent of Ford models were rated as having average or better reliability, compared with 63 percent a year ago.

GM showed improvement in its report card score, as it climbed from 57 to 61. However, its percentage of vehicles recommended fell 6 percent.

According to the publication, newer models like the Buick Enclave/Saturn Outlook/GMC Arcadia SUVs, Cadillac CTS and the Chevrolet Silverado performed well, but some of the older models did not score as high.

Chrysler, meanwhile, didn't show gains like its Big 3 rivals. Its number of recommended vehicles fell to 14 percent from 21 percent, as many of its new vehicles were not received well.

"Noisy, underpowered engines, poor interior craftsmanship, cramped seating and limited visibility plagued the most recent Chrysler vehicles tested," the publication commented.

It's not uncommon, however, for domestics to score lower than imports in CR's study. Only 25 percent of its recommended vehicles are domestics, while roughly half are Japanese brands.

"Some manufacturers are very consistent in producing good performing, reliable vehicles," said David Champion, the magazine's senior director of automotive testing. "But even in the lower ranks of the report cards, some manufacturers have some gems."

Officials added: "In the end, the companies that make the best vehicles are those that excel in performance, interior craftsmanship, safety, comfort and reliability."

"The best continue to set a higher and higher standard, a competition in which consumers are the ultimate winners," they continued.

Owner Cost Comparisons

In other news from the publication, CR also released results from its new owner-costs comparisons and found that a lower sticker price doesn't always equal more cost savings for an owner in the long run.

Some vehicles may have a less expensive price tag at the dealership, but can potentially have greater five-year ownership expenses such as fuel costs, depreciation and maintenance, the company pointed out.

"CR's cost of vehicle ownership comparisons are useful to consumers because they provide a benchmark for car shoppers to compare the total costs of their choices over time," commented Rik Paul, the magazine's automotive editor.

Take the Mitsubishi Lancer, for instance. With a sticker price of roughly $17,500, it's potentially $5,000 less than a Mini Cooper.

But when five-year ownership costs are factored in, the Lancer can actually cost $3,000 more than the Cooper.

Compare the Toyota Highlander and the V6 Ford Explorer. While the Highlander may often cost $3,000 more than the Explorer to initially buy, its long-term ownership costs can be $6,500 less.

To calculate cost of ownership, the publication considers such factors as depreciation, fuel costs, interest, insurance and maintenance, in addition to repair and sales tax.

Depreciation is, by far, the biggest ownership cost considered, officials pointed out.

"To calculate depreciation, CR starts with the price that a typically equipped model sells for. If a model often sells at a large discount, CR factors that into the price," editors explained.

"From that figure, CR deducts the wholesale trade-in value of the car at the end of the period, based on data from CR's Used Car Price Service. The average model depreciates about 65 percent over five years," they continued. "When CR doesn't have depreciation data for a new model, it uses estimates based on comparable vehicles."

The publication went on to note that it assumes a vehicle will be traded in after five years.

That being said, editors indicated that the most expensive vehicle to own over five years was the Mercedes-Benz S550 at about $101,750.

Conversely, the least expensive was the manual transmission Toyota Yaris at $23,250.

Also factored in are fuel costs, which can prove to be a challenge, especially for SUVs. To assess fuel expenses, in December 2007, CR assumed vehicles were driven 12,000 miles per year and applied national gas price average.

Interest costs are based on a five-year loan plan, assuming a 15 percent down payment and an average interest rate of 6.86 percent. This is based on December figures from Bankrate.com. According to CR, these costs are directly tied to the sticker price.

Meanwhile, insurance is a variable cost, as expenses differ for age groups, locations and driving records. CR, however, used data from the Insurance Institute for Highway Safety.

According to the publication's reliability study, maintenance and repair expenses represent an average of 4 percent of five-year ownership costs.

In comparing costs among similar models, the publication highlighted some other interesting trends.

For example, despite having excellent reliability, Lexus models tend to have high maintenance and repair costs.

The Lexus ES350 was estimated to cost owners $2,300 in repairs and maintenance in the first five years. The Lincoln MKZ, however, has repair and maintenance costs that are roughly half of that.

Also, while the Toyota Prius hybrid may cost $7,500 more at the dealership than a non-hybrid Chevrolet Cobalt, its long-term ownership costs are potentially $2,000 less.

More information on both of these studies is available in CR's Annual April Auto Issue or at cars.consumerreports.org.

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