The 10 vehicles with the highest overall cost of ownership are top-drawer luxury models, but that doesn't mean that lower-priced vehicles are necessarily a better value.
True, the more affordable the car, the less cash it gobbles up overall. But digging into cost-of-ownership data from Vincentric, a firm that tracks vehicle lifecycle expenses for car dealers, manufacturers and others, shows that the five-year lifecycle costs of the 10 most expensive vehicles to own are lower multiples of their base prices than models that cost less.
Take two examples: the 2007 BMW M6 Convertible, with a manufacturer suggested retail price (MSRP) of $104,900; and the 2007 Audi A3, with a $25,340 MSRP. The pricier BMW M6 Convertible is fourth on our list and is more expensive to own than the Audi A3, which is among the 10 least expensive luxury vehicles to own. But the M6 Convertible's cost of ownership after five years is $150,565, less than 1.5 times the car's base price; whereas the A3's five year total cost of ownership of $51,513 is more than two times the vehicle's base price.
The lesson: If you sink more than $100,000 into a car, each of those dollars stretches farther over time. That's largely because high-end cars tend to hold their value better than regular vehicles. But remember, you're still shelling out more money for the pricier car.
Breaking Down Ownership Costs
After five years, the total cost of owning a vehicle can tally more than twice the original price paid at purchase time, even with a trade-in to soften some of the upfront expense. Depreciation is the largest single cost incurred; others include interest on loans, insurance premiums, taxes and other fees. Cars also consume investment income that could otherwise be accruing interest in bank or brokerage accounts. Then there are maintenance and repair costs and, lastly, cash for fuel.
We determined the Top 10 Most Expensive Vehicles to Own using Vincentric data. The company calculates cost of ownership over five years using six variables: depreciation, interest and opportunity costs, fuel, maintenance and repairs, insurance, and taxes and fees (see explanations below). Go to the ForbesAutos.com slideshow to see the full list of the most expensive vehicles to own, including each model's total cost of ownership after five years, plus the costs for each of the six components that make up the total. The ranking includes 2007 models only.
Vincentric breaks down ownership costs for every variation within a model line. Consider the Mercedes-Benz CL-Class coupe, the most expensive car to own and No. 1 on the list. Vincentric computes separate lifespan costs for the CL550 and CL600, the two versions sold by Mercedes. The ownership costs shown in the slideshow are model-line averages of Vincentric's breakdowns.
For luxury cars with very high sticker prices, depreciation claims more money than it does for mass-market models that cost a lot less to begin with. That's true even for luxury models that retain their value very well.
Over five years, the Porsche 911 GT3 -- the tenth most expensive car to own -- depreciates just 41 percent from its starting MSRP. By contrast, the Lincoln MKZ, the 10th least expensive-to-own luxury model, sheds about 67 percent of its base price. But the MKZ sells for around $30,000, compared to $106,000 for the 911 GT3. Sixty-seven percent of $30,000 is a lot less than 41 percent of $106,000 -- that works out to $20,100 versus $43,460, respectively.
Higher-priced cars also run up higher costs in other categories, says David Wurster, Vincentric president. For example, you pay more in taxes when your car costs more. Insurance premiums typically run higher, too, he says.
Cost of ownership calculations measure monetary value only. Luxury models that demand more dollars for care and fuel pay more in image and prestige.
"We don't buy cars just for transportation," says Michael Calkins, who follows ownership costs as manager of approved auto repair at the national headquarters of AAA. "We buy them to make a statement about who we are and where we are in the socio-economic spectrum." Status and style are intangible, ego-driven elements of car ownership. "Everyone has to put his or her own value on that," Calkins says.
Car buyers torn between luxury and frugality can balance the two by avoiding special editions and super-speedy versions of high-line models, Calkins says. "You end up taking a huge hit on those. I would love to have an AMG model [by Mercedes], but the standard model is a much better financial purchase," he says.
Mercedes' high-performance AMG versions suffer more depreciation because of their stratospheric prices. Insurance also costs more for these models. Even tire expenses will likely consume more funds, Calkins says. Not only are the larger, wider tires found on AMG and other high-performance models inherently more expensive than standard ones, but if they're high-speed rated, then they wear faster and drive ownership costs up even more.
Vincentric updates cost-of-ownership estimates monthly. The figures here are from late May 2007. Interest expenses assume a five-year loan at 6.86 percent with a 15 percent down payment. Opportunity costs consider what owners would have made if car expenses went into certificates of deposit instead. Insurance costs are for a typical driver under age 65, with a clean record. Vincentric used the EPA's 2007 Fuel Economy Guide to calculate fuel costs.
Our ranking does not include exotic sports cars and ultra-luxury sedans produced in limited numbers. Vincentric doesn't track them, in part because buyers of these rare cars aren't as interested in total ownership costs, Wurster says. "The vehicles we're talking about are day-to-day driving vehicles. Even if it's a $150,000 Mercedes, people are still driving it," he says.