Toyota Expert from Japan Reveals, "If You Do The Analysis Correctly, You Might Find That Cheaper Cars Are Not Always Cheaper To Own"

According to a well-known Japanese automotive expert, car shoppers get too focused on the price tag when buying a new car.

"As you know, buying a new car is perhaps one of the most important things you might do in your lifetime because they cost so much money these days and there are so many different ways to make a decision that it is very difficult to do the right thing…so many of you guys tend to make a decision based on buying price," says David Koichi Chao―a global expert in the field of automotive evaluation, engineering, and strategy.

For example, would buying a brand new Nisan Kicks rather than a brand new Lexus GX save you money if you kept either car for 5-6 years? The answer might surprise you.

And that is what Mr. Chao recently revealed to new car buyers: how to use an important business tool called "Life-Cycle Cost Analysis" to determine the lowest cost of ownership between different car models.

Life-Cycle Cost Analysis Explained

Life-cycle cost Analysis (LCCA) in car shopping evaluates the total cost of owning and operating a vehicle over its entire lifespan rather than just focusing on the initial purchase price. It helps buyers make more informed decisions by considering all the potential costs of owning a vehicle.

The key factors of LCCA in car shopping include:

Its Purchase Price―The upfront car cost, including taxes, fees, and registration.

The Financing Costs―The interest you will pay over the life of a car loan if the vehicle is financed.

The Fuel Costs―The estimated fuel expenses based on the car's fuel efficiency and average miles driven annually.

Your Insurance Policy―Annual insurance premiums can vary based on the vehicle type, driver's profile, and coverage options.

The Maintenance and Expected Repairs―Routine maintenance (oil changes, tire rotations) as well as predicted and unexpected repairs as the vehicle ages.

Depreciation Loss―The decline in the car's value over time is often the biggest cost of car ownership.

Taxes and Fees―Ongoing costs such as annual registration fees, state taxes, and inspection fees.

Its Resale Value―The amount you can recoup when selling or trading in the vehicle after a few to several years.

Subscription Cost― While the car might seem affordable, subscription costs for added features can increase significantly over time.

The importance of utilizing LCCA in car shopping cannot be overstated. It helps car shoppers see beyond the MSRP, enables better financial planning for the household, allows you to compare multiple vehicles more effectively, Helps identify and factor in hidden costs, and helps potential hybrid and EV shoppers assess whether the savings in fuel and maintenance offset their higher upfront costs.

HOW TO BUY A CAR LIKE AN ENGINEER // BEST METHOD // LIFE-CYCLE COST ANALYSIS

"Life cycle cost analysis is a foundational tool for making purchasing decisions. But we don't always follow that same methodology when buying a car, and I'm telling you right now that if you can figure this out using life cycle cost analysis, you will make the right choice every single time," promises Mr. Chao in this informative new video in which you will learn about his seven factors you need to consider:

1 and 2. Purchase Price Minus Resale Value: Depreciation is the most important factor of any model you are looking at. For example, a Toyota Land Cruiser has nearly zero depreciation compared to a Nissan Kicks.

3. Maintenance Cost: Not all dealership service departments charge the same for similar services and repairs. For example, service and repairs for Toyota, Honda, and Nissan are significantly less than for European models from makers like BMW and Porsche.

4. Non-Covered Wear and Tear: You must consider the replacement costs of wear and tear items such as tires, batteries, and brakes. A sports car will go through the tires alone much quicker than a non-sports model at a cost within the first 3 years of ownership that eats away at any initial savings when buying the car.

5. Operating Cost: Fuel is the primary cost within this factor. New car shoppers make the mistake of viewing all hybrids as fuel economy cars when, in fact, hybrids from Toyota, like the Force Max engine in the Tacoma, are not designed to maximize fuel economy but instead to maximize power and torque. "So, you can't always assume that hybrid model will save you a substantial amount of gas," warns the video host, adding that even for EVs, your charging costs may only be slightly lower than gasoline costs for a non-EV.

6. Insurance Cost: Insurance costs vary wildly between models and often do not make sense to shoppers. For example, the host owns a Lexus LC 500 and a Toyota Land Cruiser, with the Lexus insurance being twice as expensive even though it is driven much less than the Land Cruiser. "I'm considering selling the LC 500 because I don't feel like paying double the amount of insurance for that car," admits the host.

7. Subscription Cost: Monthly subscription fees for services and features can add up very quickly and, by the end of a few years, could wipe out any savings you might have expected buying a particular model. You have to take into account and be willing to monitor those fees as a factor in your buying decision.

For more details about using Life-Cycle Cost Analysis for new car shopping, be sure to watch the video provided below:

For More From This Toyota Expert, be sure to check out this article titled "All Cars Built In Japan Are Safe To Buy, And They're Reliable Long Term…Well, That Used To Be The Case, But Not Anymore, Admits Mechanic From Japan."

For more about buying cars and saving money, advice from a Toyota expert, here is an informative one titled "Used Toyota Buying Guide ―I Want To Talk To You About Some Toyota Models And Lexus Models That I Would Avoid Buying in 2025 Reports a Toyota Master Mechanic."

Timothy Boyer is an automotive reporter based in Cincinnati who currently researches and works on restoring older vehicles with engine modifications for improved performance. He also reports on modern cars (including EVs) with a focus on DIY mechanics, buying and using tools, and other related topical automotive repair news. Follow Tim on Twitter at @TimBoyerWrites as well as on Facebook and his automotive blog "Zen and the Art of DIY Car Repair" for useful daily news and topics related to new and used cars and trucks.

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