Most Value-Packed Cars

In the market for an affordable car that will go the distance? Might want to head to your local Hyundai dealer. Ask for the Santa Fe — a widely praised set of wheels on Consumer Reports' list of recommended vehicles.

Eaaagh! A Hyundai?

That reaction, according to Alexander Edwards, automotive division president of the research firm Strategic Vision, is common. Many years ago, Hyundai had a down-market reputation and was selling its cars on price alone; then, the company's vehicles lacked both real quality and perceived quality.

In Pictures: 15 Most Value-Packed Cars

Hyundai's products have come a long way in recent years, and the Santa Fe was the top-scoring Small SUV in Strategic Vision's 2007 Total Value Awards, which measure classes of cars based on reliability, a solid warranty, strong anticipated resale value, durability, and innovation.

But it didn't make our list of Value-Packed Cars because Hyundai's dealership service hasn't quite caught up with the quality of the vehicles, at least according to J.D. Power's respected Customer Service Index (CSI) study, another measure we consulted in compiling our list of most value-packed cars. The CSI looks at how satisfied customers are with a particular brand's overall dealership experience after the sale. From 2006 to 2007 Hyundai stood slightly below the industry average.

Those that topped the list include the Mini Cooper, the Lexus LS460, the Acura TSX, the Lincoln MKX, and the Lexus IS.

Material Matters

These vehicles prove that our list of Value-Packed Cars is by no means a rundown of the market's cheapest cars. Now nearly all vehicles come well equipped with convenience and safety features, and manufacturers are doing a much better job of maintaining reliability and quality, both areas that used to vary widely. Shoppers are quite aware that initial price is just a part of the financial pie and that getting a model with a high predicted residual — and thus, higher resale value or lower lease payments — is also important.

Many cars are a good value in those straightforward, conventional dollars-and-cents ways, but there are also other, more nuanced elements that come into play, according to Edwards.

Customers, for example, often look at whether interior colors match and have a nice feel, and whether the interior is thoughtfully designed.

"They see this and feel that," he says, "and say, OK, the vehicle is going to be more reliable, more durable, and a better value."

What's more, because there's less variation in traditional quality, the perceived value of the brand also has more of an impact overall, according to Edwards. For instance, he says, people often put Toyotas on their shopping list not necessarily because they see the product as strong but because of the strong name and its brand equity.

"Equity is what puts a particular brand on the short list" when shoppers start looking for a new vehicle, says Lonnie Miller, director of industry analysis at R.L. Polk & Co., and for many shoppers, they won't consider a model until they believe in the value of the brand, he says.

Several brands, including Lexus, have built value on the basis of the dealership experience itself. The personalized, boutique approach to sales and service at Lexus dealerships was at first ignored by other European luxury brands, says Gauer, which then maintained that only the product was important.

"Now when you compare the dealer bodies," he says, "Mercedes and BMW are trying to see how they can do it as well as Lexus does."

Neal Oddes, director of product research and analysis at J.D. Power, says that the sales experience that comes with a car contributes to its value, but it's the dealership environment and the post-sales experience that's a much bigger influence--especially, in the long term, how the dealer body deals with service issues.

"Chances are if they have a good service experience," he says, "and get a good trade-in value at the end, they'll prefer that brand next time they're in the market."

Oddes emphasizes that the factors that make up value to one customer can be quite different than what they are to another, and within each market segment or type of vehicle they vary as well.

Small-car shoppers might equate better fuel economy with stronger value, while midsize buyers are more interested in features for the money and minivan shoppers are more interested in safety, he says.

Quality and reliability are the consistent value factors that cross all segments, though.

"In IQS [initial quality] and APEAL [buyer satisfaction]," he says, "we ask what are the most important influencing factors, and it varies drastically from segment to segment," he says.

For example, J.D. Power has measured that gas mileage is one of the most important factors for 76 percent of compact car buyers, compared with 10 percent of large premium buyers. And while only 5 percent of large premium buyers indicated low initial price, 36 percent of compact car buyers said it was an important factor.

"Very simply put, value is for every dollar spent, how much you get out of it," says Edwards. "But that can be translated emotionally, practically or in a number of ways."

Methodology

To find the cars that are likely to represent the strongest value to the most people, we first noted Strategic Vision's top-three vehicles in Total Value Index (TVI) in each of the firm's 20 market segments, such as convertibles under $30,000, small SUVs, and luxury cars. These categories are determined by the purpose the vehicle most often serves and vehicles that are likely to be cross-shopped. The TVI is an assessment of the complete ownership experience, including reliability and the dealership experience, plus short- and long-term costs of ownership.

For each of these models, we then looked at Consumer Reports reliability scores, removing any models with below-average reliability. We then considered Automotive Leasing Guide's (ALG) residual value scores for each of the remaining vehicles, ruling out any vehicles with less than three stars (on their five-star system). ALG, an industry source for vehicle depreciation rates, determines its ratings based on a number of factors including quality and durability, consumers' perception of quality, how products are priced, how the automaker manages supply and demand, total sales and the brand's sales strategy.

Next, we considered the importance of the brands themselves by ruling out any models for brands that were ranked below the industry average in J.D. Power's Customer Service Index (CSI). And finally, we looked back at the TVI for each vehicle and considered, subjectively, the practical value and appeal of luxury features, fuel economy and technological features, for example, of each within their respective segments.

In Pictures: 15 Most Value-Packed Cars