Toyotas are known for their durability, which is reflected in the impressive holding resale prices for used vehicles. In comparison, luxury vehicles, such as the Volvo XC60, have a precipitous drop in value as they age. The rapid depreciation of luxury-class vehicles led to a statistical analysis to determine if the costs of buying a gently used XC60 would be similar to the cost of a Toyota Rav4.

Data collection was accomplished using Python to scrape data from Edmunds.com. Linear regression was used to predict vehicle costs by mile for both the Rav4 and XC60.

Based on the predictive models, the XC60 depreciates roughly 26¢ per mile; the Rav4 depreciates approximately 16¢ per mile. The regression lines intersect at 44,000 miles.

Volvo XC60 Linear Regression Model

  • predicted_price = 41459.0 -0.26 * mileage
  • R²: 0.71
  • Standard Error: 4906.31
  • Vehicles in the data set: 251

Toyota Rav4 Linear Regression Model

  • predicted_price = 37392.46 -0.16 * mileage
  • R²: 0.74
  • Standard Error: 4051.23
  • Vehicles in the data set: 300
Linear regression model for vehicle depreciation

Calculating Cost of Ownership

While the price of the XC60 and the Rav4 are predicted to be similar in value around 40,000 miles, further research was completed to understand the overall cost of ownership differences. If purchased at 40,000 miles and driven until the vehicle reaches 150,000 miles, the Volvo XC60 would cost roughly $150 more per month to own than the Toyota Rav4.

In the end, purchases do not need to be purely mathematical. Sometimes an item is worth more because of the comfort and fun factor. The true questions is, if you were deciding between a Rav4 and XC60, would you find the vehicle aesthetic, comfort and fun factor of the XC60 worth the approximately $150 extra monthly cost?

Parsimony

In the age of AI, people rush to complex algorithms when often a simple solution is best. One could labor over in depth financial forecasting for ownership costs, but a rough estimation satisfies the needs for most individuals to make an informed vehicle choice. The power of statistics lies in the freedom of inference. Data indicates that most consumers will choose the Toyota; others will happily pay more for the comfort and aesthetic bonus. Inference allows for an informed decision, which may be different depending on your unique preferences and needs.

XC60 vs Rav4