Top 10 Least Expensive (TCO) Luxury Vehicles to Own

Cars at the lower end of the luxury class are the least costly to own because their lower starting prices minimize the effects of depreciation.

Luxury car buyers looking for the best long-term value should cross-shop vehicles at the lower end of the price spectrum. The lower the starting price of a vehicle, the more likely it is to mitigate the single largest financial hit associated with car ownership — depreciation.

This is the second feature in SMART-NEWS's series on vehicle ownership costs, and here we rank the top 10 luxury vehicles with the lowest cost of ownership over five years.
See also our list of the Top 10 Most Expensive Vehicles to Own.

Depreciation is the largest ownership cost for any vehicle. Therefore, models with lower sticker prices end up dunning owners less than models with higher manufacturer suggested retail prices (MSRPs).

That's true even if a higher-priced model holds its value better: The Audi A3, the fifth least expensive car to own according to our research, depreciates a whopping 71 percent from its base MSRP over five years. By contrast, Porsche’s 911 Turbo — the sixth most expensive car to own — loses just 54 percent of its base price in five years. But the A3 starts at around $25,000, compared to $122,900 for the 911 Turbo. And 71 percent of $25,000 comes out to $17,750, which is a lot less than the 54 percent of the Porsche’s $122,900, or $66,366.

Looking at those numbers, it starts to become clear why the top 10 luxury vehicles with the lowest ownership costs all have base prices below $35,000.

Lower-priced cars also cost less in other categories, says David Wurster, president of Vincentric, the research firm that provided data for our rankings. “You see that in taxes and insurance,” he says.

But bear in mind that Vincentric’s projected ownership costs are only estimates. Actual expenses will vary by region. “There are large variations in maintenance and repairs when you look at a state where costs of living are higher, because labor rates are higher,” Wurster says. Similarly, people living in high-tax states will likely pay more in vehicle taxes and other fees. Insurance rates also change by region, as do fuel prices, he says. All of these are factored into the five-year ownership costs used to rank the vehicles on our list. Click here to see the full list of vehicles in the slideshow.

Drivers do have some control over ownership costs, regardless of where they may live. For instance, driving style and distances traveled determine fuel, maintenance and repair expenses. Plus, insurance premiums remain lower with good driving records.

“There are substantial variations in insurance rates between carriers even in the same region,” says Michael Calkins, who tracks ownership costs for AAA's national office as manager of its approved auto repair program. “You have to be a smart shopper for everything, not just for the car, but also for the insurance.”

Owners who care well for their cars can even beat the deprecation average. “You need to maintain your vehicle properly,” Calkins says. “Keep it in good condition cosmetically and mechanically to maximize its trade value.”

Japanese and Swedish brands dominate our list of the 10 least expensive luxury vehicles to own, likely due to the fact that they tend to have lower starting prices. One German and one American nameplate help balance out the rankings.

The 10 least expensive to own luxury vehicles are determined by estimating six expenses over five years: depreciation, interest and opportunity costs, fuel, maintenance and repairs, insurance, and taxes and fees (see explanations below). The rankings include 2007 models only.

Vincentric breaks down ownership costs for every variation within a model line, so the ownership costs used to rank vehicles on this list are averages of all variants in a given model line. For example, Acura sells four versions of its TSX sedan, the least expensive luxury car to own. Vincentric computes separate lifespan costs for each of the four variants.

The data used in this ranking is from late May 2007 (Vincentric updates cost-of-ownership estimates monthly). Interest expenses assume a five-year loan at 6.86 percent with a 15 percent down payment. Opportunity costs consider what owners would have earned 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.

10. Lincoln MKZ
Starting MSRP: $29,305
Five-year cost of ownership: $55,011
Depreciation: $19,718
Interest and opportunity cost: $10,456
Fuel: $10,983
Maintenance and repairs: $3,880
Insurance: $7,851
Taxes and fees: $2,123

The Lincoln MKZ is the only model from a Michigan-based auto company that makes the list of either the 10 least or 10 most expensive luxury cars to own. It squeezes onto the 10 least list by dint of its relatively low sticker price. With a base MSRP under $30,000, the MKZ can get away with a high depreciation rate. Averaging $19,718 for the front-drive and all-wheel-drive versions sold by Lincoln, the MKZ's depreciation takes 67 percent of its starting price.

9. Lexus ES 350
Starting MSRP: $33,470
Five-year cost of ownership: $54,585
Depreciation: $19,549
Interest and opportunity cost: $10,905
Fuel: $10,648
Maintenance and repairs: $3,888
Insurance: $7,315
Taxes and fees: $2,280

The ES 350 from Lexus, the luxury division of Toyota, has been called a Camry in fancy attire. That may account for its showing among the 10 luxury leaders in lowest total ownership cost. The sedan is the highest-priced model that makes the list, with a starting MSRP of $33,470. That raises its loan interest and opportunity cost, as well as its taxes and fees. But the Camry's reputation for dependable quality rubs off, so the Lexus does well with depreciation, and it also enjoys the second lowest insurance cost.

8. Acura RDX
Starting MSRP: $32,995
Five-year cost of ownership: $54,502
Depreciation: $17,826
Interest and opportunity cost: $11,323
Fuel: $12,542
Maintenance and repairs: $3,538
Insurance: $6,950
Taxes and fees: $2,323

The Acura RDX is the only SUV that runs with the 10 luxury vehicles that are least expensive to own. With the gas-guzzling rap against SUVs, it seems appropriate that the RDX has the highest estimated fuel cost in the group. At $12,542 over five years, the Acura squanders 20 to 25 percent more fuel than some passenger cars in the ranking. Still, for a sport utility, its EPA fuel economy rating of 19 mpg city/23 mpg highway is good — especially for an all-wheel-drive hauler with pep and pizzazz.

7. Lexus IS 250
Starting MSRP: $30,255
Five-year cost of ownership: $53,220
Depreciation: $16,998
Interest and opportunity cost: $10,793
Fuel: $10,480
Maintenance and repairs: $3,700
Insurance: $9,060
Taxes and fees: $2,189

As a sport sedan made for more aggressive posturing, the Lexus IS 250 carries the highest average insurance cost among the 10 least expensive luxury cars to own. That excess alone moves it lower on the list. With better resale value — and therefore lower depreciation — than four of the six luxury models that have lower lifespan costs, the IS 250 would rise at least one spot in the ranking, even though its purchase price is higher than the six models that score lower lifetime ownership costs.

6. Volvo V50
Starting MSRP: $26,690
Five-year cost of ownership: $52,906
Depreciation: $18,306
Interest and opportunity cost: $10,054
Fuel: $10,346
Maintenance and repairs: $4,006
Insurance: $8,176
Taxes and fees: $2,018

Like other European models among these economy leaders of the luxury class, Volvo's introductory-priced wagon stumbles with a high depreciation rate that saps its value. The average depreciation of the three V50 versions Volvo sells, at $18,306, comes to 69 percent of the car line's starting MSRP, among the highest in the group. The V50 wagon would do better, but the higher priced, all-wheel-drive version pulls its average ownership costs upward.

5. Audi A3
Starting MSRP: $25,340
Five-year cost of ownership: $51,513
Depreciation: $18,092
Interest and opportunity cost: $9,863
Fuel: $10,026
Maintenance and repairs: $3,697
Insurance: $7,815
Taxes and fees: $2,020

As a hatchback, the Audi A3 is the only model among the 10 least costly luxury cars to assume that classic economy car shape. Fittingly, its five-year fuel cost estimate, at $10,026, is the lowest among the least expensive to own. But the A3 suffers from rapid depreciation. The model line's five-year depreciation, averaging $18,092, steals 71 percent of the A3's starting price, the highest percentage among the 10 lowest cost luxury cars.

4. Saab 9-3 SportCombi
Starting MSRP: $27,495
Five-year cost of ownership: $51,499
Depreciation: $17,457
Interest and opportunity cost: $9,672
Fuel: $11,521
Maintenance and repairs: $3,159
Insurance: $7,740
Taxes and fees: $1,950

Vincentric's David Wurster explains that higher purchase prices point to higher ownership costs. The Saab 9-3 SportCombi shows how. The wagon's starting price is just $1,245 higher than its kindred, the 9-3 Sedan. Over five years, the SportCombi depreciates about $200 more, takes about $300 more in interest and opportunity costs, $300 more for insurance and $100 more in taxes and fees. Add about $300 worth of additional gas consumed by the heavier wagon and the SportCombi drops two places below the 9-3 Sedan among the least expensive to own vehicles.

3. Volvo S40
Starting MSRP: $24,240
Five-year cost of ownership: $51,484
Depreciation: $16,941
Interest and opportunity cost: $9,736
Fuel: $10,783
Maintenance and repairs: $4,005
Insurance: $8,104
Taxes and fees: $1,915

Starting at $24,240, the Volvo S40 sedan is the lowest-priced luxury car among these 10 models with the lowest ownership expenses. But its average depreciation, at a whopping 70 percent of the base price over five years, hits hard. Not only will you spend more to own the S40 than you will for the top-rated Acura TSX, you'll also spend more when you visit the repair shop. At $4,005, the S40's maintenance and repair expenses tie with the Volvo V50 wagon as the highest among these lowest 10.

2. Saab 9-3 Sedan
Starting MSRP: $26,250
Five-year cost of ownership: $50,282
Depreciation: $17,247
Interest and opportunity cost: $9,352
Fuel: $11,197
Maintenance and repairs: $3,159
Insurance: $7,437
Taxes and fees: $1,890

The first of five European luxury models with the lowest lifespan costs, the Saab 9-3 Sedan benefits from its relatively low purchase price. That puts it in second place among the least expensive to own vehicles, even though depreciation grabs 66 percent of its starting MSRP. At their base prices, you'll pay less to purchase a 9-3 Sedan than an Acura TSX, the least expensive luxury car to own. But through five years, the 9-3 will gobble up $3,000 more.

1. Acura TSX
Starting MSRP: $28,090
Five-year cost of ownership: $47,084
Depreciation: $13,808
Interest and opportunity cost: $9,730
Fuel: $10,279
Maintenance and repairs: $3,002
Insurance: $8,285
Taxes and fees: $1,980

Half the models on this least expensive to own list wear lower sticker prices than the Acura TSX. But after five years, this sporting sedan ends up the most economical. Acura's reputation for vehicle reliability helps hold up resale value, so that the TSX depreciates just 49 percent over five years — the lowest depreciation among the 10 luxury cars that consume cash most lightly. It also boasts the lowest maintenance and repair expenses among these 10 lowest cost luxury models.
(C)Forbes